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First-Time Buyer Mortgage Programs

Written by Posted On Saturday, 07 December 2019 14:35
First-Time Home Buyer Mortgage Programs First-Time Home Buyer Mortgage Programs

Available Mortgage Loans For First-Time Home Buyers

One of the more common questions a real estate agent will get from a first-time homebuyer is whether there are any special first-time buying financing programs.

Buying your first home is a serious undertaking. There are mortgage programs that can help you, but there are a few things that you need to consider before you jump on board with a lender and commit to a mortgage.

It all starts way before you sign on the dotted line. Most importantly of all, you need to make sure you have a healthy credit profile. It is worth planning ahead. In a perfect world, you should try to plan in advance for about two years. That may sound like a long time, but when it comes to the world of finance, it is not.

Above all, you need to make sure that you have an attractive financial history before buying a home. That means that you should not take out any unnecessary loans, or apply for credit cards unless you have a good reason to do so. Every time you apply for a line of credit, the related credit check will show up on your credit profile.

Once you have gotten your financial house in order, it will be essential to find an excellent buyer's agent, along with a mortgage professional, you can trust. The mortgage broker should be someone who will offer their expertise in choosing one of the best first-time buyer mortgage programs. There are going to be numerous options at your disposal. What might be perfect for one borrow might not be the best fit for you.

A skilled mortgage professional will be able to help make your decision far less stressful.

Saving Up For A Down Payment

No matter what mortgage program you decide to go for, it is essential to have a down payment. In general terms, the more you have, the better interest rate you will be offered by a lender. This is the best way to save money on your mortgage or loan in the long term.

One of the first questions most real estate agents will ask their buyer clients is how much money they plan on putting down. Quite often, buyers confuse the difference between a down payment and their earnest money. These aren't the same thing. The down payment is how much you are putting towards the purchase of the house outside of the mortgage.

An earnest money deposit, on the other hand, is security for the seller that you won't be backing out of the transaction. Make sure you keep them straight. One of the most common FAQ's for real estate agents from buyers is concerning earnest money and down payment funds.

To encourage home buying and extend their mortgage services, most banks offer individual savings accounts for newcomers to the real estate market. Just another reason why it is essential to plan accordingly.

The Best Available Buyer Mortgage Programs

When it comes to mortgage programs, it is essential to shop around. Different factors, such as costs, will vary significantly, and you should always make sure that you are 100% familiar and understand any mortgage program that you are considering.

Unsurprisingly, many rookie home buyers fall into the trap of paying more than they need to pay. Remember that your home is an investment as much as a home. It is likely to be the most significant and expensive investment you will ever make.

Don't be afraid to lean on your buyer's agent for guidance. The role of a buyer's agent is to offer their expertise from start to finish.

This is what you need to know about the most common mortgage programs in a nutshell:

FHA Mortgage

An FHA loan is an excellent way to go for those with a low credit score and low deposits. This type of loan is insured by the Federal Housing Administration and offers an opportunity for many young people to own their first home.

One of the attractive features of an FHA loan is that you do not have to have a significant down payment. With an FHA mortgage, the minimum down payment is 3.5%.

An FHA mortgage is one of the most popular mortgage programs for first-time homebuyers.

USDA Mortgage

If you live in a rural area, you can take out a USDA loan. The loan program was set up by the U.S. Department of Agriculture to make it easier for low paid farm workers to finance a mortgage. Since the early days, it has evolved into one of the only remaining no down payment mortgage programs for first-time homebuyers.

There are a few guidelines for procuring financing with a USDA loan, including maximum population levels for a particular area and income requirements. You can read more about USDA mortgages on their website.

VA Mortgage

A VA loan is backed by the Department of Veteran Affairs and can only be accessed by veterans and their families. Most VA loans are low cost, offer competitive rates, and often no down payment.

To qualify for a VA mortgage, you need to be serving or have served in the military. One of the most significant reasons a buyer will use VA financing is because of the no down payment option.

Good Neighbor Next Door

If you are looking for a program that offers housing aid, you should check out the Good Neighbor Next Door program. You are eligible for this assistance if you work in law enforcement, fire service, you are a medic or a teacher.

This a great situation to make the most of in areas that need revitalization, and you can get a 50% discount on the home’s list price if you purchase property in under-served regions classified as “revitalization areas.” Potentially, this program has some serious real estate opportunities.

Conventional 3 Percent Down

Homeowners loans or mortgages backed by Fannie May or Freddie Mac only a 3% down payment. To qualify for one, you need to have an excellent credit history, and this goes to prove why it is so important to plan your financial future. Conventional three percent down mortgages are relatively new but are becoming a popular mortgage program for first-time home purchasers.

The Energy-Efficient Mortgage

An Energy-efficient mortgage backed by VA or FHA loan programs helps new buyers to improve the energy efficiency of their properties by combining a primary loan and mortgage. No large down payment is needed.

The Home Path Ready Mortgage

The Home Path Ready Buyer Program is the way to go if you would like to purchase a foreclosed Fannie May property. You will receive 3% in closing assistance, but you need to complete an education course, which is a good idea. Whenever you are buying a bank-owned property, it is critical to brush up on how to buy a foreclosed home. Purchasing a foreclosure property is far riskier than a traditional sale.

FHA 203K Renovation Loan

The FHA Section 203(k) a great way to go when you need to pay for home improvements as part of your first home purchase. It adds the cost to the mortgage and lets you pay for everything in one payment.

Look out for local mortgage programs, as well. It's possible some local lenders could offer grants for deposit payments and may even assist you with closing costs — a great way to get money off your first home purchase.

Native American Direct Loan

The Native American Direct Loan is a specialist mortgage service offering assistance to Native American veterans who would like to build homes on federal trust land, renovate, or buy a home.

When it comes to a mortgage or a loan, you should never lose sight of the fact it is crucial to shop around as much as you can. Be realistic about how much you can afford and don’t take on too much. It is a good idea to try to save as well as pay off the mortgage.

Final Thoughts

There are many excellent financing programs for first-time homebuyers. It is essential to figure out which one best suits your needs. Always make sure you do an abundance of due diligence before rushing into a hasty decision. Work with your real estate agent and mortgage broker to make the best mortgage choice possible.

It's worth the time and effort when choosing a mortgage program. Keep in mind the odds are high you'll have the mortgage for an extended amount of time before you refinance unless mortgage rates drop substantially.

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Use the above resources to make the best-informed decisions when buying your next house.

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Bill Gassett

One of the top RE/MAX agents in New England over the last decade plus. Providing exceptional real estate services to buyers and sellers in the Metrowest Massachusetts area including the following communities: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.

See my real estate website at Maximum Real Estate Exposure - one of the most visited real estate sites in Massachusetts.

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