When it comes to mortgages, there are so many choices. Should I choose an FHA home loan or are there other home loans that are best? Below I will discuss the two best options out there to narrow down your search!
These two mortgages are backed by the US Government. The best part of this, these first time home loans have been around for a very long time so they are not likely to go away anytime soon. Not like the recent meltdown of sub-prime mortgages.
If you think you are ready, be sure to get a loan that works well with first time home buyers.
With so many lenders to choose from, you want to be sure and select the right one.
First I want you to get really serious about only working with a fixed rate loan program. The reason for this is simple. You need to know that your mortgage payment will not be adjusting a year or more from now. Since you are new at this, I want you to be able to stay in your home for many years.
When I was in the mortgage business, I strongly suggested to every client to only consider a fixed rate loan. This made it better for them and myself.
Why do I say that? Well, I knew going in that my first time home buyer could afford this mortgage payment. Then, I also was able to sleep better at night knowing they could stay in the home for several years without too much worry about the payment changing on them.
The fixed rate loan type is the best choice if your purchasing for the first time! Now let's discuss the two best mortgage choices.
Understanding your different options will help you to piece together a perfect home loan puzzle made just for you.
The first and foremost choice I feel for those purchasing for the first time is the FHA home loan products. This program has been around since 1934.
First thing you need to know is that FHA (Federal Housing Authority) does not actually lend the money. FHA is a division of HUD or Housing and Urban Development. What HUD does is it provides a guarantee (like insurance) to the FHA loan program thus the lender has no risk.
With a guaranteed loan, the lender is more inclined to loan you money for a mortgage. So in case you stop making your mortgage payments, then the FHA Insurance would pay the lender off. But you don't get to keep the home. HUD would take possession of the house.
Have you ever heard of a HUD Foreclosure? In most cases, that is a home bought using the FHA home loan and the owner lost it. HUD had to foreclose and now the US Government owns the home.
You may be wondering, how is this a guarantee? It's only a guarantee to the lender that they won't loose any money. This guarantee benefits you by giving the lender a warm fuzzy about not being so strict in qualifying you for the mortgage. You can see why I feel this one is the best. They will work with you and be flexible so you can purchase that first home!
This kind of program allows first time home buyers to purchase a house in the city or country. The choice is yours. First you qualify for the loan, then the house has to qualify. Neither is very difficult so don't worry.
Now let's take a look at the second option I feel is so cool!
Now this second choice might be of interest to you. If you want to live in a rural community, this is a great choice. Again, backed by the USDA, another branch of the US Government, this program is designed to help you in a similar fashion as the FHA loan. Again, you have to qualify for the loan program first, then you have to take into account the areas where you can buy a home since that is decided by the program guidelines.
It has certain income limitations whereas the FHA loan program does not. Also it does not require a down payment on the mortgage. It's a true zero money down loan. Wow, have you heard of any no money down home loans after this mortgage mess? I didn't think so. Most people felt these deals were gone.
Well, it's still out there and you may not have known about it. It is kind of a best held secret. Sort of like a finding a large golden nugget in a pile of hay. You have to look for it, but it is out there.
Like the FHA loan it is a fixed rate home loan. Also, it allows you to even build a brand new house. Imagine that, you can build your dream house in the country and it's your very first home! Again, you do have to meet the guidelines.
Of the first time home loans, this one is a pretty cool one!
In conclusion, I hope you found this information helpful. These are some of the best first time home loans I know of. Yes, there are many others.
Do you feel like me, "if it ain't broke don't fixed it"? Sorry about the poor grammar, but my point is, both of these programs have been around for decades so my guess is that they work.
In fact I know they will, I have helped many clients with these two options. Some felt they just could never own a home and were surprised that renting was not the only option for them!
So I kind of like the zero down home loan program as one of the best first time home loans. There is a lot more to this. To learn more visit Zero Down Home Loans for greater details.
There are other FHA home loans. FHA Loan Products gives you quite a description so you can investigate further.
Want more information? Go to Home Loans Explained for more details.
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