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Getting the Best Discount for a First Time Home Buyer

Posted In:  mortgage

This might be the best of times and worst of times for some in the current economic situation we American’s have found ourselves in. For some the economy has hit them hard. There have been record unemployment rates and subsequent home foreclosures.

On the flip side of things, ones man’s loss is another man’s gain. The ability to become a new home owner has never been better. The range of available homes is endless. You will be able you get the most for your dollar in a market where values have dropped.

Being a first time home buyer can afford you some great discounts and programs. Doing some research on neighborhoods, current properties sold in the last 90 days as well the convenience of certain areas to shopping or downtown will all prove invaluable when you start to visit potential homes for sale.

Are First Time Programs Right for You

Programs designed for first time home buyers may be the answer to many of your needs. Some might find however, that some of the restrictions or parameters might not be in their best interest.

It is important to be completely aware of all the rules and reselling restrictions before you enter into a new mortgage, especially as a first time home buyer. In some states an attorney isn’t required, making you more susceptible in an area you are not too familiar with, and why should you be? Let’s take a look at some of the pros and cons of first time home buyer programs.

Pros

First time home owner loans are designed to give financial assistance to the first time buyer. This can happen in many different ways. Many programs allow you to put down little and even no money. Many conventional mortgages require a minimum of 20% of the selling price as a down payment.

The loan might restrict the amount of fees a lender can charge, offer grants or even forgive loans. You may qualify for a payment defer or a subsidization of interest charges. Most first time home owner loans are geared towards people with lower to moderate incomes. The HUD will ensure that the property meets certain structural and safety standards.

The programs can vary depending on where you live and economic circumstances. There have been times where the program was available to home buyers who have previously purchased a home but have not done so in over 3 years. It is a good idea to always check what programs are currently available. The following is the HUD (U.S Department of Housing and Urban Development) web site; it is a great place to start. 

Cons

The lower spectrum of property values are typically where subsidized loans are granted. You most likely will not be able to finance the recently up for sale “biggest house” on the street. If you are granted a first home owner loan you must be the primary occupant. You will not have the ability to rent out the property. Often, there are penalties for selling your home too soon after purchase. If you choose to sell the home, you may need to pay recapture taxes from the benefits you had received when getting the loan. In some cases, a home that greatly increases its value and is then sold early may need to share profits with the program.

What’s the Deal?

There are many different repayment terms available for conventional mortgages. Many HUD loans are only available for a 30 year fixed rate mortgage.  With a good credit score, typically above 680, you may wish to check out other mortgage deals available through local banks or national mortgage companies.

Many loans nowadays may also be attained with little or even no money down. Unfortunately for some, when your credit score drops below the 680 mark subsidized loans may be your only option. Take the time to find out what your credit score is.

You might find that with some quick work it is able to be increased enough points to get you above the 680 point. Some credit scores are low just due to not having enough credit, or a long enough credit history. Just don’t accept your score without doing a little research as to exactly what has been used in determining the score you have been given.

Tim Iandoli is a promising new freelance writer. He writes about personal finance, insurance, travel, food, wine and self-improvement. He's a master problem solver, restaurant critic, entrepreneur and all around fabulous guy.

 

 

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