A lot of MN residents share a similar dilemma when it comes to buying a home: they do not have enough money to make a 20 percent down payment. This then results in them having to purchase mortgage insurance, which does not only up their mortgage-related costs, but in most cases, also wastes their money.
Fortunately, financial institutions still offer down payment assistance services, Mortgage Waters notes. These programs enable home buyers to make the necessary down payment and avoid having to deal with the additional, and most of the time, unwanted mortgage insurance. With these grants, you can start the home buying process.
The First Step: Determining How Much You Can Afford
Whether you can make enough down payment or you need to obtain assistance, determining how much you can afford should always take precedence. Aside from the price of the home, consider the other costs, too. From here, you can already figure out the amount of money you can allot for the down payment and see how much you lack.
Next Up: Tightening Up Your Credit
While borrowers with a less-than-stellar credit score can still qualify for down payment assistance programs, it is always better to present something more attractive to lenders. So do as much as you can to improve your FICO score before starting the home-buying process. You should also thoroughly and carefully document your income to show proof to lenders that you can repay your loan.
Lastly: Applying for Down Payment Assistance Programs
Many lending institutions offer down payment assistance grants, which means you have plenty to choose from. However, you should never jump at the first offer: take the time to compare rates and programs first.
As with any financial help, make sure you meet the qualifications, so ask as many relevant questions as you can, especially regarding the terms, interest rate, conditions, and possible penalties.