According to the National Association of Realtors, parents gifting money to their children to help purchase a first home is a common experience. Gifting money is a type of down payment assistance that can help them realize their dreams of homeownership.
When Is The Right Time To Purchase Your First Home?
Purchasing a home is a long process that requires a lot of soul-searching, financial planning, and research. Where do you want to live? What are your needs and wants? Do you have a household budget to support a home?
There are many personal and long-term decisions you must make, as well as understanding when the time is right.
You Have Weighed The Pros & Cons Of Owning Vs. Renting
Renting a home can have many advantages over owning a home, such as saving on maintenance costs or you do not plan on living in the area for more than 5 years. However, you cannot build equity or customize as you like. Owning a home also provides you with a tax breaks, thanks to your monthly mortgage payments.
You Have A Good Credit Score & Stable Employment
Before approving a mortgage, a lender will want to see that you have a good credit score and stable, steady employment. A good credit score will show the lender that you can handle debt responsibly, while steady income assures them that you are financially stable.
Provide financial documents and other records to your lender, including bank statements and pay stubs, to provide proof of income. If your credit is poor, wait until it is improved before applying.
You Have Enough Money Saved Up For Down Payment & Other Expenses
Purchasing a home is an expensive process. The down payment, inspection fees, closing costs, and other costs can add up, which requires a significant amount of savings.
If you fall into the requirements for VA or FHA loans, you may be able to get a home loan and mortgage with as little as zero down. Down payment assistance is also available in the form of grants, low-interest mortgage, and special mortgage programs.
Remember that down payment assistance is not free money and you will be required to take a home buyer education course.
Before purchasing a home, speak to your lender about your options, your budget, and getting pre-approved.