
3 Personal Finance Hacks For Homebuyers
HUD
Homes
HUD homes are houses owned by the US
Department of Housing and Urban Development. They are acquired by the
government during the foreclosure of an FHA-backed mortgage and can thus be
eligible for FHA financing, whose benefits include lower down
payments and potential financing for home improvements.
HUD homes tend to be quite cheap, and they can
also help you save in smaller ways. For instance, HUD pays up to 5 percent of
closing costs and your real estate broker will not charge you for placing the
offer. The main downside of buying a HUD home is that they can be in a state of
disrepair, but this makes it perfect for a first-time buyer looking for a cheap
fixer-upper.
This detailed guide by Home Advisor
contains everything you need to know about how HUD Homes work and how you could
benefit from buying one. You can find HUD homes in your area on their official website or by asking your
local realtor.
Special
Loans
FHA financing on a HUD house is just one of
many special loans you can get to help you buy your house. Before you start
shopping around for mortgages, check whether you are eligible for any of the
following:
●
USDA Loan - Also called a rural development loan, this is
similar to FHA financing but is specifically targeted toward people buying
homes in rural areas. These usually have zero down payments and are even
cheaper than FHA loans. Eligibility is for low and moderate-income families.
●
VA Loan - Loans by the Department of Veteran
Affairs are offered to veterans, surviving spouses, and those currently
serving. There are zero down payments and no mortgage insurance. Instead, a VA
Funding fee -- usually 2.15 percent of the loan amount --
is the only extra charge.
●
Good Neighbor Next Door - A HUD initiative
that offers a 50 percent discount on homes in revitalization areas for teachers
and emergency service workers. The homes are only listed for a week, so you
have to be fast and keep an eye on the official listings.
Credit
Score Hacks
Your credit score makes a big difference in
how much you will ultimately pay for your house. The better your score, the
lower the down payment, the better the interest rate, and the more your bank is
willing to lend you. For this reason, it is worth your time and some effort to
boost your score as much as possible before applying for a loan.
To begin, you need to know your credit score
(about one in three Americans don’t). You
are entitled to a free credit report
from all three credit report agencies every year: download them all to get
yourself familiarized with the figures. Then, try some of the following
techniques:
●
Reduce debt as much
as possible -- this is less of a hack than just common sense, but it will by
far have the most impact on your score.
●
Increase your credit limits while
taking care to keep your spending the same.
●
Ask a loved one with good credit
whether you can become an authorized user on the credit card -- also known as
piggybacking.
●
Dispute negative information on
credit reports if it is outdated or incorrect.
●
Add your rental information to
your credit score.
A little bit of research goes a long way when
it comes to financial planning, so take your time finding out what options are
available to you. Don’t assume you are tied to a classic 30-year mortgage with
a 20 percent down payment or that your credit score is beyond your control.
Help is available to you: you just have to know where to look.