3 Useful Homebuyer Tips for Financing a Home
Estimated Reading Time: 6 Minutes
Homebuyers often have different challenges to overcome, the reason we like to give you these 3 useful homebuyer tips.
Unfortunately, foreign buyers need to be aware of the fact that you need to be a resident to obtain home financing in Costa Rica. I’ve seen a couple of banks who say they will finance your home purchase without being a resident.
I have a bad experience with this and you don’t want to lose your earnest money deposit. So make very sure you’ll be able to finance the home before you sign a purchase agreement.
Before you start shopping for a home, you’ll need to have a good look at your financial situation. Are you a cash buyer or do you have established credit? Buyers who have already owned a home have the credit history to show that they can manage this kind of loan if they have a pending option purchase sale agreement.
If you’re a home buyer who wants to purchase a second home, you will have equity, and securing a new home loan might be easier. Please note that Costa Rican banks will lend a lower percentage of LTV on a second home.
If you are a homebuyer who is burdened by a lack of credit history, you’ll probably need to save up a large down payment first.
Consider there is a lot of information out there to consider and no clear guidance regarding what to do to prepare to buy a home. Do your homework first. There are some key tips that you can use to prepare for the home buying process that a homebuyer usually is not aware of.
Your finances will play a key role in the buying process, especially if you are younger. Plus, there are far too many homeowners that find themselves applying for a refinance soon after they have purchased a home to bring the payment down each month. Finances are often a key factor that prevents people from buying a home in the first place. They can be the reason for losing the home for not making mortgage payments on time.
To avoid these outcomes, it is essential to save money and develop your credit. While this may seem like extra steps to take, they will make the home buying process a whole lot easier in the long run.
1. Save Money
While it is hard to save when you are paying rent, the fact remains that you need cash to buy a home. You will be asked for a down payment on almost any kind of loan that you apply for. Without a large cash reserve in the bank for your down payment, you might not be able to get a home loan. This is one of the key stumbling blocks that people run into when they are looking for a home.
So how can you save money for your down payment? Be creative. You might want to move in with your family for a while if they will put up with you. Sit down and revise your monthly payments and spending. Do you need that fancy car? Are you spending all your money on wining and dining? It’s really difficult to enjoy life and pretend to buy a home at the same time. Unless you make a ton of money.
2. Develop Your Credit
Many people incorrectly believe that they have good credit just because they do not have any black marks on their credit history. The reality is that banks and other lenders are looking for a deep credit file when they are thinking of lending on a home purchase. Mortgages can last up to 30 years and in some cases, you will need to be able to prove that you have experience using credit to be able to make payments for that duration.
To develop your credit, you and your spouse or partner need to use at least two kinds of credit. It’s important to manage the payments on these lines of credit correctly. Use a credit card for a low recurring payment. You can also apply for a personal line of credit or car loan and pay them off on time. If your credit file shows on-time payments and good management of debts, it will be way easier to be approved for a loan.
3. Don’t Miss Out on Buyer Programs
Watch for a virtual housing expo. Banks organize those at least once a year. Some banks offer 100% financing, others give great discounts on properties they have foreclosed on. Some places consistently offer good homebuyer incentives such as lower interest rates, lower closing costs, and more.
These programs can make all the difference between becoming a homebuyer or renting until you drop.
Buying A Home Can be Easy
Please do not worry or become stressed about how you will manage to afford to buy a home. Ask for the assistance of a GoDutch Realty agent and they will walk you through all the steps of applying for a mortgage.
Preparation for buying a home is key, along with developing your credit file and having cash for a down payment if the bank doesn’t finance 100%. Shop around for the best deal with any of the Costa Rican banks.
Please get pre-approved before you go shopping for homes. Shopping for a home should be an exciting and fun process. By using these tips and tricks, you will be able to have a positive home buying experience with little to no stress involved. Once you have followed up on these tips, here are 23 more.
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I want to remind our readers that we appreciate any referrals you can send us. Also, remember GoDutch Realty when talking about your home in Costa Rica to friends and family. We appreciate it.