Low Down Payment Mortgages

There are a few programs to help first time home buyers that require very little down payment in regards to the total purchase price. This option will get you to your down payment goal a lot faster than the traditional mortgages. There are VA loans, backed by the Department of Veterans Affairs, and USDA loans, backed by the Department of Agriculture, which may not require any money down on a mortgage at all as long as you meet certain criteria. FHA loans, backed by the Federal Housing Administration, only require at least 3.5% down. Conventional loans, backed by private companies, may only require at least 3% down, but those loans usually rely on good credit. These low down payment options might be a great way to quickly get into a house and start building equity. A big drawback of this strategy is that the lower the down payment is, the more interest you are likely to pay over time which costs you more money in the long run. Additionally, some of these low down payment programs have extra fees associated with them such as large origination fees that are rolled into the payments or required mortgage insurance.

State and Local Down Payment Assistance

Many states have assistance programs to fund down payments for Houston real estate sponsored by government agencies, nonprofits, foundations, and even some employers. These programs can have a varying degree of geographical focus which can range from the whole state, city, neighborhood, maybe even down to one house. The assistance may come as a grant or a no-interest forgivable loan. These programs are usually partnered with competitive interest rates or tax breaks. Sometimes, homeownership classes are required. One drawback of this strategy is that there might be a purchase price or income restrictions. 

Down Payment Gifts or Loans From Family or Friends

One of the most accessible sources of down payments for real estate are gifts or loans from family members or friends. Make sure you write down your payback agreement if you agree to a loan, and pay it back! You do not want to ruin personal relationships over your house! One drawback to using a gift as a down payment for real estate is that it’s not quite as simple as it seems. The person who gave you the money must verify they gave the gift and also prove that they were able to make the gift. If you do have to rely on gifts for the down payment of a house, you might not be prepared for the full cost of homeownership and are statistically likely to default on the loan. Another drawback is if your down payment for Houston real estate is a personal loan, that loan must also be calculated into your income to debt ratio to make sure you can still qualify for the loan. 

Crowdfunding your Down Payment

There are a few sites that enable you to crowdfund your down payment. There are some sites that work like a registry where contributions to your down payment are funneled into your bank account. This scenario works well for situations like engaged couples or newlyweds. Other sites require you to become prequalified for a loan before they will allow you to raise money for your down payment for Houston real estate. Possible drawbacks to this strategy are credit card processing or other fees and the potential inability to shop around for lenders.

Retirement Account Withdrawals or Loans

Depending on your retirement plan, you may be able to withdraw funds or request a loan from your balance for your down payment for Houston real estate, but this strategy should be used with discretion. There are a lot of fees surrounding early withdrawal from retirement accounts. Make sure you consult with your account director before choosing this strategy. 

Call Grace Houston Texas Property Sellers LLC today at (347) 470-2204 or send us a message to discuss ways to quickly get a down payment for Houston real estate.

The post 5 Ways To Quickly Get A Down Payment for Houston Real Estate appeared first on Grace Houston Texas Property Sellers LLC.

What Is A Rent To Own Property?

Buying a rent to own property in Houston simply means that it is a lease-option agreement with a traditional lease and an option to buy the property by the end of the lease period, typically three years. The lease-option agreement is not to be confused with the lease-purchase agreement, where you are required to purchase the property at the end of the lease term whether you really want to or not. You pay rent to the current owner/landlord through the duration of the lease, and a portion of it may even be applied towards the down payment of the house, or “rent credit.”

Buying The Property

You will most likely have to pay an option fee which is an upfront, non-refundable consideration for the ability or “option” to purchase the property in the future. This fee is negotiable but is usually between 2.5% and 7% of the purchase price. Your rent to own agreement should also specify when and how the final purchase price will be determined. Some buyers prefer to lock in the final purchase price when they sign the lease. This will help them if the house prices in Houston are on the rise, but it might also be higher than the current market price. Other buyers will decide to determine the purchase price at the end of the lease to reflect a price more comparable to the current market price. 

Who Is Responsible For Taxes and Repairs?

The current owner is responsible for any property taxes, homeowners association fees, and insurance. Before you agree to anything, make sure the property taxes are paid current. Depending on the terms of the rent to own lease agreement, you may be responsible for maintaining the property and paying for repairs. Typically, the current owner handles major repairs on the home, but you may be responsible for lawn maintenance, pool cleaning, pressure washing, etc. Make sure your lease is extremely clear on who would be responsible for items such as large appliances, structural repairs, and routine maintenance. Keeping the lawn mowed is way different than having to replace all of the old plumbing.

When The Lease Ends

Now that the lease is over, you either have to buy the property, or you get to decide if you are going to buy the property. It all depends on your rent to own agreement. If you chose the lease-option agreement, it is now time to secure funding if you decide you would like to purchase the property. If you are unable to secure funding, or you do not want to buy the property anymore, you are not obligated to buy the property. On the other hand, if you chose the lease-purchase agreement, you are now obligated to buy the property. The owner may file a lawsuit against you if you do not come up with the funding. 

Give Grace Houston Texas Property Sellers LLC a call today at (347) 470-2204 or send us a message to discuss these and other things you should know about buying a rent to own property in Houston, TX. We can help you decide which property is right for you.

The post What You Should Know About Buying A Rent To Own Property In Houston appeared first on Grace Houston Texas Property Sellers LLC.