7 Great Tips for Financing a Home in 2021
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Buying a home is a big decision, personally and financially. This means you’ll want to be educated on the ins and outs of the home buying process. Below, we will help you learn how to finance a home and provide valuable mortgage and home financing tips. Whether you are a first-time buyer or veteran, you can benefit from the following information. The market and other factors are constantly changing in the housing market. Homebuyers should do plenty of research on the current market before purchasing a home.
How can I buy a house in 2021?
Whether you are buying a home in 2021 or another year, you should use our 7 home financing tips that we will go over a little later on. Knowing the rules and proper steps can give you a competitive edge when it’s time to hit the playing field. Having a lender and real estate agent that can work together can help make the home buying process seamless. If you have a preferred real estate agent, you should consult them and ask for lender recommendations or vice versa. However, the most important thing is that your team of representatives puts your best interests first.
Homebuyers in the 2021 market may experience a few challenges and changes. In most areas, there are more buyers than there are homes for sale. For buyers, this means you should be totally prepared to purchase when you start shopping. You may need to move quickly. In addition, you may need to be flexible with the seller to make your offer more attractive. While it may be tempting to make a strong offer on the home you fall in love with, it’s important to prioritize your budget. There will always be another home. The process takes patience. Experts report that in most markets prices are increasing but interest rates are decreasing. Most likely, this is related to the influx of buyers. Buyers should be prepared to use digital tools during the home buying process. This means virtual tours, e-closings, Zoom meetings, and so on. Some of these digital tools are expected to stick around even after the pandemic ends. For many, virtual meetings offer a more convenient solution than face-to-face meetings.
What do I need to do to buy my first home?
If you are a first-time home buyer you will most likely need to save up a down payment. Once you have a down payment saved, you should get pre-qualified for a mortgage. Since you have no track record of paying a mortgage on time, lenders may require more money down and more documentation from a first-time buyer. First-time buyers may be able to apply with a cosigner that has more established credit history to help them lock in a lower interest rate.
How can I buy my first home with no money?
If you are a first-time home buyer with little to no money down you may have some options. Homebuyers should look into VA loans, FHA loans, and homebuyer assistance programs.
Should I wait to buy a house in 2021?
Real estate is one of the best ways to invest your money. If you want to buy a house in 2021, you should. Even if housing prices drop, interest rates may go up. If interest rates go up, the costs of the loan will increase which could cancel out the lesser sale price.
Will real estate prices drop in 2021?
Real estate professionals predict that housing prices are unlikely to drop in 2021. With interest rates dropping, buyers are eager to purchase a home.
Top 7 Home Financing Tips for 2021
The home buying process can be lengthy and at times, confusing. Homebuyers should break down the process into steps to make it less overwhelming. In addition, taking things step by step can help you make better financial decisions. While realtors or lenders may try to hurry the process along, don’t let the pressure get to you. Taking your time and making educated decisions is critical for making good financial decisions. Let’s take a look at our 7 home financing tips for 2021. . .
Determine your house budget
Personal loans can be used for home improvements and just about anything else. Homeowners that need to finance smaller home improvements should consider a personal loan. Unsecured personal loans do not require collateral making them a fairly safe option. In addition, you don’t necessarily need great credit to qualify. Acorn Finance has lending partners that can help all credit types obtain a personal loan for home improvements. Another benefit of using a personal loan is that you can receive funds quickly. Some lenders that partner with Acorn Finance can fund loans within one day. Most personal loans offer a fixed interest rate, thus making them easy to manage with predictable monthly payments. The minimum monthly payment and interest rate does not change with a fixed interest loan. Most banks, credit unions, and online lenders offer personal loans. Homeowners that are considering a personal loan can submit one application through Acorn Finance and receive multiple personalized loan offers within minutes without affecting their credit. Acorn Finance can connect you to lenders that offer personal loans up to $100,000 with terms up to 12 years and rates starting at just 3.99%.
Save for a down payment and closing costs
HELOC stands for Home Equity Line of Credit. While HELOC loans can be attractive for home improvement financing, there is some risk and tough qualifications involved. Homeowners will need to have equity in their homes to use a HELOC loan. Most lenders require homeowners to have at least 20% equity to qualify for a HELOC. If you have enough equity in your home you can borrow against the equity and use your house as collateral. You should be able to borrow about 75% to 90% of the available home equity. However, if you default on a HELOC loan you may risk losing your home. HELOC loans provide homeowners a revolving line of credit that allows them access to capital when they need it. Similar to a credit card, you should only pay interest on the amount you use. Interest rates can depend on the loan to value and your credit score. Terms for home equity loans can range between 5 to 30 years. In most cases, lenders allow borrowers up to 10 years to withdraw funds and 20 years to repay.
Get a mortgage pre-approval
Home equity loans are similar to HELOC loans. Hence to their names, they both require homeowners to have equity in their homes to qualify. Similar to personal loans, home equity loans provide homeowners a lump sum of cash that can be repaid over time with interest. Most lenders can loan between 80% to 85% of your home’s equity. Since you are borrowing against the equity in your home and using it as collateral, you may risk losing your home if you default on a home equity loan. Home equity loans can also be referred to as a second mortgage or home equity installment. Home equity loans are usually fixed-interest loans with a set payment schedule. Most banks and credit unions offer home equity loans. You may find some online lenders that offer home equity loans as well.
Choose the right home
Refinancing allows homeowners to replace their current mortgage with a new one while providing additional funds for home improvements. In most cases, a refinance is easier to qualify for than a HELOC or home equity loan. If you plan on refinancing to loosen up cash for home improvements you’ll want to have equity in your home. When it comes time for refinancing we recommend getting quotes from multiple lenders or consulting a professional. You do not have to refinance with your current mortgage company. Once you have completed the refinancing process you should receive a check. The balance of your new mortgage will be higher than your old one. The difference between the old mortgage and the new mortgage balance should be the amount of the check you received, plus any closing costs in the loan. If interest rates have dropped since you took out your first mortgage, you may be able to lower your interest rate while borrowing money. One downside to refinancing is that you will most likely have to pay closing costs on the entire loan amount.
Make a strong purchase offer
Paying cash for home improvements is usually the cheapest option. Saving up enough money may require patience and time. In some cases, you may not have time to save. However, whether homeowners have the cash or not, they may still prefer financing. Making affordable monthly payments may be more manageable for some individuals. In addition, some individuals prefer to save their cash for a real emergency.
Keep your emergency fund intact
This may be an optional step in some cases. Whether lenders require you to have cash reserves or not, it’s a good idea to have them. Once you have purchased your home, you will want to do everything you can to make sure you own it as long as possible. Setting aside several month’s worth of mortgage payments can help protect homeowners that experience a job or income loss.
Prepare for closing day and homeownership
Just because your offer is accepted, does not mean you have purchased the home. Following an offer acceptance is a closing process that includes home inspections, home appraisals, and more. If the inspector finds issues with the home you may be able to negotiate a lower price to repair the issues. In some cases, the appraisal value may be lower than your offer price. If this is the case you may need to renegotiate the price or put more money down. If the appraisal comes in at or above the purchase price, you should be good to go.
In conclusion, 2021 could easily be your year to become a homeowner. If you purchase a home that needs home repairs or improvements you can get an unsecured home improvement loan through Acorn Finance. Acorn Finance has top-rated lending partners that do not require collateral or money down. Homeowners can borrow up to $100,000 with terms up to 12 years. In addition, if you are looking to purchase a home that may not qualify for a mortgage you may be able to secure funding through Acorn Finance.
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#2. Receive multiple pre-qualified offers
#3. Get connected with lenders to obtain your pre-qualified loan
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