Are there special mortgages for a first time home buyer ?



Are there special mortgages for a first time home buyer ?

The Asnwere is Yes!

First time home buyer loans allow buyers to get into a house more easily. However, just because you’re a first time home buyer doesn’t mean you should use a first time home buyer loan. These programs have restrictions and strings attached. While they are a perfect fit for some, first time home buyer loans are the wrong choice for others.

What is a First Time Home Buyer Loan?

A person’s first home purchase is a big deal. It takes time, energy, and money. To help with the money hurdle, some people use first time home buyer loans. These programs vary depending on where they’re offered, but the general idea is this: first time home buyer loans give financial assistance to qualified borrowers. They may do this in the following ways:

* Allow for a very low (or no) down payment
* Subsidize interest costs (they pay all or part of it)
* Offer grants
* Forgive loans
* Limit fees that lenders are allowed to charge
* Defer payments

Note that first time home buyer loans available to you might offer any or none of the benefits listed above.

Who Gets First Time Home Buyer Loans?

As you might imagine, individuals who have never owned a home are good candidates. In addition, some programs offer first time home buyer loans to people who have not found a home within the last three years. Again, check to see what’s available to you

You may have to meet certain income restrictionsto qualify for a subsidized first time home buyer loan. In general, these programs try to limit benefits to people with low and moderate income levels. If you earn too much, you won’t qualify for the program.

First Time Home Buyer Loan Restrictions

Most programs put a dollar limit on the property you’re buying. You probably can’t use a first time home buyer loan to buy the more expensive properties in your area. Instead, you’ll be limited to properties on the lower end of the spectrum. Again, the idea is to benefit people who have the most need.

You also have to live in the home as your primary residence. If you're going to rent the place out, don’t use the first time home buyer loan. Finally, the home you buy most likely has to meet some physical requirements. It must be in good condition and free from any safety hazards (such as lead-based paint, and good roof, for example).

First Time Home Buyer Loan Pitfalls

For some first time home buyers, these programs are perfect. They open the door to home ownership where a family would not have been able to buy a home. Communities also benefit from first time home buyer loans – homeowners take care of their property, get involved, and contribute to the economy. Nevertheless, first time home buyer loans can be the wrong choice in some cases.

With a subsidized first time home buyer loan, you face some challenges:

* Lower value home may not be the home you want
* You might lose some of the benefits of the program if you sell your home too soon
* You may have to pay recapture tax for some of the benefits you received
* You may be limited to a short list of loan types (only 30 year fixed rate mortgages for example)
* You may have to share increased home values with the program

Given these restrictions, you may do best to avoid subsidized first time home buyer loans. Patrick Schwerdtfeger, a California mortgage broker, notes that you’ll probably come out ahead using a plain-vanilla mortgage if you’ve got decent credit (Mr. Schwerdtfeger also does the Beyond the Rate podcast – required listening for first time home buyers). With a FICO credit score above 720, you probably won’t see an advantage with the subsidized first time home buyer loan. Once you get below 680, the subsidized program will start to look better. These days, you can get traditional mortgages with very little down.

The best thing to do is to explore all your options. Take a look at what your traditional mortgage lender is offering, and compare it to the subsidized first time home buyer loans. Once you see how the numbers compare, consider the cost of flexibility.

Next topic * How does an interest rate factor in securing a mortgage loan?


Detailed tips on Buying a Home;

Buying a Home - Should You be Buying a Home?

* Are you ready to purchase real estate?
* Buying a home vs. renting
* Buying a home and tax breaks

Buying a Home - Get Ready to Purchase.

* Determine your housing needs before buying a home?
* Other questions to ask before buying a home.

Buying a Home - Get Prequalified for a Mortgage.

* What is the difference between mortgage prequalification and mortgage preapproval?
* What is a mortgage?
* How does a mortgage lender qualify you for a mortgage loan?
* What is a credit score?
* How can I get information about my credit report?
* How does my credit report affect my mortgage qualifying for home buying?
* What if there is a mistake on my credit report?
* Can I qualify for a mortgage to purchase real estate without a credit history?
* What income source(s) can be used to qualify for a mortgage?
* How much income do I need to qualify for a mortgage loan?
* What factors can affect my mortgage payment?
* How much of a down payment do I need when buying a house?
* What is an LTV, and how does it affect the size of my mortgage loan?
* What is included in the mortgage payment?
* What is an escrow account? Do I need one when home buying.
* Can I pay off my mortgage ahead of time?
* What type of mortgage loans are available?
* When does an ARM loan (adjustable rate mortgage) make sense?
* What do I need to do to secure a mortgage loan?
* When buying a home, how do I choose the right mortgage lender?
* Are there special mortgages for a first time home buyer?
* How does an interest rate factor in securing a mortgage loan?
* What happens if interest rates decrease, and I have a fixed rate mortgage loan?
* Research down payment assistance, government grants and mortgages by state.
* Mortgage calculator to calculate mortgage payment based on mortgage rates.

Buying a Home - Find a Realtor.

* What is the role of a Realtor, when home buying?
* How do I select a Realtor when buying a house?

Buying a Home - Searching for Homes for Sale

* What questions should I ask when looking for a home?
* What to look for in a community when searching real estate?
* Where can I find resources about communities I like when buying a home?
* How can I get information on local schools?
* When buying a house, how do I find out the price of real estate in a certain community?
* When doing a walk through, what should I look for?

Buying a Home - Make your Real Estate Offer

* When home buying, how do I determine the initial offer?
* What is earnest money deposit?
* Making the final offer to purchase real estate.

Buying a Home - Getting a Mortgage

* Now that you have found a house, take these steps to get a mortgage.
* When buying a house, what do I need to secure a mortgage loan?
* How do I choose a loan program when home buying?
* How do I compare mortgage terms between mortgage lenders?
* Information on mortgages.
* When applying for a mortgage, are there any costs or fees?
* How does a good faith estimate help shopping for a mortgage?
* What is RESPA?
* What are my responsibilities during the mortgage loan process?

Buying a Home - Close your Real Estate Transaction

* What happens after I've applied for a mortgage loan?
* What does a house inspector do, and how does a real estate inspection figure in when buying a house?
* Are there other types of real estate inspections I need when purchasing real estate?
* What are the terms of the sale agreement when buying a house?
* At real estate closing, what will my settlement cost be?
* What do I get after closing?
* What can I expect on closing day when buying a house?


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Are there special mortgages for a first time home buyer ?