With so many choices how can you be sure which one is the best? If you're searching for new home loans and have never purchased a home before, you're going to love the information on this page.
If you feel you are ready, be sure to select a lender who is familiar with the various unique programs and loans out there.
Spending time reading here and browsing other pages on this site you will find everything you are looking for when buying a house.
There is special financing offered for families who are buying their first home.
Through the federal government there's a way to buy your first home and stimulate the economy at the same time.
Imagine that, you win and the community wins when buying a house! That's exactly what the Federal Government wants to see. More people like you owning their own home.
Think about the joy you will experience. This is your home, not the landlords. If you want to paint or even tear down a wall, go ahead. Make your dream home perfect!
Some first time home buyer loans are funded at state levels while the Federal Housing Authority (FHA) offers its own assistance for those who wish to realize their dream of home ownership. Each FHA loan is like a fingerprint. No two are exactly alike. There are many combinations available to you.
The absolute best program for first timers is the FHA home loan program in my opinion. Why do I say this? This loan program has rather relaxed credit and income qualifications plus it offers a low down payment option.
When you think about it, simply put, no matter if you are a first time home buyer or even if you have owned a house before, these programs work the same. First you need to meet the minimum credit qualifications of 620 if you want to use the 3.5% down payment option. If you have credit scores lower than this, you will have to put up a larger down payment and go through manual underwriting. You may be required to put as much as 10% down.
Then your income has to be able to support the house payment. You can have up to 29% of your gross (before taxes) monthly income go towards your house payment. This must be the principal, interest, taxes and insurance (PITI).
Once you meet these basic qualifications, you can then begin the home shopping experience. You might as well be sure you can qualify before talking with a real estate agent because they are going to want to know how much home you can afford before they start showing you houses.
So then, by reading over this page, when looking for first time home buyer loans you can begin to understand the process.
What happens when you're buying a house is a mortgage gets created. Home mortgages are secured loans by putting a lien on your home. So, in other words, if you don't pay you don't stay!
Why? The lender will take your house back because of the lien they placed on it. So in a sense, they own it and allow you to live there and make any changes you want to the house. But if you stop making the mortgage payment on any of these first time home buyer loans, they will step in a take the home back.
Way too many people bought homes with very marginal credit, low down payments and used the adjustable rate loan in the early to mid 2000's. As soon as the loan adjusted, their payments went up and they could not afford the home. The lenders foreclosed and that is the short story as to why we see the glut of foreclosed homes around the country.
A typical mortgage is the purchase price of the property with the down payment deducted. First time home buyer loans can vary from lender to lender. But I really want you to think seriously about the FHA loan.
For example, with this type of loan the down payment issue can be addressed differently. There's assistance out there where you can get help making the down payment. That way you don't have to come up with all the down payment money yourself. There may even be grants to help you with first time home buyer loans in your local area. Elsewhere on this site I speak about grants that work with the FHA loan. Below I'll provide a link.
So I know you're looking for good information right? I hope you feel this is helpful. The conventional mortgage process is basically the same, but the first time home buyer loans itself is a little different.
FHA loan products are the best new home loans available. The number one benefit to be derived from this type of new home loan is that young adults who are just starting out are given a chance to own their own home. Even older adults who are living on a limited income are assisted to own a home with this program. Down payment requirements are considerably reduced making it easier to buy a home.
While FHA home loans are the most widely known, there are some other agencies that provide funding to help those who wish to become homeowners. Some private charities offer assistance with loans that they administer, and you may find help from locally owned lending institutions that are interested in helping their local economies. You have to search hard to find the real gems. It is best to locate and talk with your local HUD agency for information on other first time home buyer loans.
I'll never forget this one couple I helped buy a home. Using the FHA home loan, I was able to get them into a nice home. Also using the local grant agency in our county, I was even able to help them get a loan for the down payment which turned into a grant as long as they lived in the home for 7 years. They did not have to pay the money back.
When taking out a FHA loan, you may find that the approval process will take longer than if you choose to go with another type of loan. Sometimes sellers balk at this and will not enter into a contract knowing they will have to wait for the loan to get approved. These new home loans are typically 30-year fixed rate mortgages.
What do I mean by fixed rate mortgage? Well let me explain.....
If you're shopping, it's best to consider a fixed rate mortgage. The reason for this is simple. The rate remains the same, it doesn't go up during the whole 30 years you have the mortgage.
Would you like your payments to increase 1-5 years later because your interest rate adjusted? That's what happens when you don't get a fixed rate! Remember what I told you above? This is not a good idea since many folks lost their homes using a loan like that.
Many have fallen into this trap because it can make their payment more affordable and they can buy a bigger house. So, if you're smart, (we both know you are or you wouldn't be reading this) when looking for first time buyer loans you want to be armed with reliable information.
There are other types of new home loans to choose from as well. There are adjustable rate mortgages (ARMs), balloons, and construction loans. Each of these are different, but serve a useful purpose depending on what you plan to use them for.
So investigate each loan type closely before you sign any papers. Make sure you understand your payment, interest, and the length of time you have on your loan.
Why do I like the FHA home loan so well? I bought my first home with one. I was only 24 years old. I didn't have much money to put down. I only had to come up with a little over $500 and I was in! The seller paid the closing costs which made it very easy for me.
You can see why I'm partial to FHA! They have lower down payment and credit requirements.
So in conclusion, please be very sure of what you're doing. You are about to make a decision that will affect your life for a very long time. But because you have done your homework, you know how to spot the best first time home buyer loans for you.
Remember, I mentioned giving you a link to more information on grant programs that work with first time home buyer loans in your state? Click here to find those programs.
If you have bad credit, learn what you can do by reading Buying a Home With Bad Credit.
Perhaps you've heard of house loans with no closing costs and would like to know more about them. Then go to No Closing Cost House Loans page to see how they work.
Read this cool page on how the banks are now lowering the down payment requirements for a mortgage.
Go to House Buyer Solutions Home Page.
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