Financing your new home: payment methods and interest rates

Payment Methods for Buying a Home in North Charleston SC

You’ve found the perfect Charleston home, now what? Buying your first home in North Charleston is an epic event that doesn’t have to be overly complicated. As far as the home buying process 29461 is basically the same as many other American zip codes. There are a number of things to consider like down payment, interest rates, taxes and insurance.

Preparing for the Home Purchase

Ideally, the first thing a new buyer will do is prepare for the financial aspect of home shopping. This includes taking a number of initial steps.

Step 1 – Analyze Your Budget

Making the transition to a home isn’t as simple as moving into a new rental. Instead of a deposit you’ll have down payment, which is a much bigger investment. Typically, you will need at least 3% for the down payment, but depending on the circumstances it could be more like 5-10%. Most of the time a lender will also require that you put money in escrow to cover at least two months of taxes and insurance. Finally, you’ll also need to plan for covering the closing costs. These vary significantly, but $1,500 is a good floor.

Step 2 – Check Your Credit Score

If you are considering a home loan as a payment option there’s no way of getting around a credit check. Since the Great Recession lenders have tightened up their criteria and most won’t consider anyone with a score below 620 (the beginning of the good range). The higher your credit score is the easier it will be to get a loan and the cheaper it will be to pay it off. Check you credit score so you know exactly where you stand.

Step 3 – Clean Up and Improve Everything

With step two in mind, look for any areas where improvements can be made to your credit score and overall finances. Paying down high balances and clearing up late payments are two good places to start with your credit score.

How Housing Interest Rates Work

Housing interest rates are a vital part of homeownership. Interest will add a lot to the final cost of a home so the lower you can get the rate the less you’ll end up paying. For example, if you have a $100,000 loan at an interest rate of 6% with a minimum monthly payment of $800 you’ll end up paying a little over $57,325 in interest over the life of the loan. Knock the interest back to 5% and you’d pay $41,550.

Housing interest rates are largely dependent on your credit score and the secondary mortgage market where home loans are sold to investors. When the economy (and thus secondary mortgage market) is booming interest rates rise. Tracking the economic factors can help you determine when interest rates will be at their best, but cleaning up your credit score will also help.

Home Buying Tips for Finding the Funding

A home loan is the most common payment method for home purchases, however, there has been a growing trend of all-cash buyers in many areas of the country. Below are several payment options for covering the cost of a home.

-Tap into your savings

-Use funds from a 401K or retirement account

-Cash in stocks, bonds, etc.

-Get a securities backed loan

-Get a loan from a family member – offer to let them co-sign on the home until you pay them back

There are a number of creative loan options like two-step mortgages that are available to homebuyers. If you plan on buying a home in North Charleston SC the Crescent Homes sales team can provide personalized advice on purchasing a home in the area.