Financial Factors of Home Purchase

Financial Factors of Home Purchase

by Ron victor

When a house property is listed for sale in the market, the buyers will come with different price ranges to purchase the house property. To purchase the house property, the buyer should have enough price consideration for the property. Most buyers do not have enough cash to purchase the house. To buy the home the buyers would search for obtaining finance through mortgage. To purchase the house property, the buyer is to obtain the mortgage from any of the institution, banks, and mortgage lenders and so on. In order to evaluate the financial plans of the buyer, financial strategies are to be evaluated. Financial details are the major reasons that are included in the offer price.

Down Payment

Down payment is the initial payment made by the buyer to the seller for the purchase of the house property. This down payment is to be disclosed properly by the buyer at the time of purchase. As part of the offer price, the amount or volume of the down payment is to be decided by the buyer. At the time of down payment the seller will evaluate the possibility of the house buyer obtaining the home loan. When the buyer make large down payment, it is easier for the buyer to obtain the mortgage approval. The underwriting guidelines for this will be less restrictive. Down payment is the financial aspect which will affect your financial requirement.

Influence of Interest Rate

The other aspect that includes in the financial requirement of the purchase is the interest rate offered by the mortgage lenders and banks. To protect the buyer against the financial shortage, the interest rate offered by the institution is to be less. When interest rate paid by the buyer is more, then the buyer will be afraid of buying the house property. Interest rate is the financial drawback for the buyer. To purchase the home property the buyer will obtain the mortgage from the mortgage institution and banks with the high interest rate. If interest rate rises quickly, the mortgage payment paid by the buyer will be higher. When interest rate offered is more then the buyer can close the contract. Interest rate also affects the financial aspect of the buyer.

Financial Incentives

The seller may sometimes ask the buyer to pay of the price consideration in single payment. In such a situation, the buyer may ask incentives to the seller regarding the payment. When the incentive is asked to the seller, the seller may sometimes provide the incentive to the buyer. Here the seller may negotiate the price. Financial incentives are the main consideration to be considered by the buyer at the time of purchase. The buyer can ask the seller to provide the loan to him for the purchase of the house property.

Seller Financing

Obtaining the loan from the seller is called seller financing. It is a second mortgage which helps the buyer to facilitate the home purchase. The benefit for the buyer is that combining the down payment with the second mortgage from the seller, will avoid paying mortgage insurance and also save money.

You are the individual who make home purchase offer through cash, it makes the sense to provide the documentation for the funds available. The offer should contain information whether you obtain fixed rate or adjustable rate of mortgage. The offer should also state whether you are obtaining conventional financing or any other loan.