May 5, 2009
First Time Home Loans
It’s often called the “American Dream”, but it applies to people around the world. What is this dream? Owning a home of your own. However, being a first-time homebuyer can seem like a daunting task. There is paperwork, money, down payments, interest rates, choosing a home, and…well, the list goes on and on. In short, buying a home can be stressful.
First time home loans try to address this issue by making the financing more attractive. You will have to meet certain requirements for most of these programs. Whatever you do, don’t bend the truth just a little to qualify, it’s not worth the hassle when you are found out. Here are a few things such programs typically offer.
Lower interest rates - These can be tied into your down payment, or may be underwritten by the lender. A 1/4 percent decrease in the interest rate could add up to paying $1,000s less over the course of your mortgage. Be careful though. You must understand exactly what the terms are, and figure out if you could handle the worst-case scenario if it would happen (no matter how unlikely the lender says it is).
Reduce fees - There are all kinds of additional costs associated with home ownership that many first time buyers are not aware. It’s no surprise that these costs can add up, sometimes to the point of putting your own home out of reach. Any reduction in fees will make the home loan more affordable.
Lower down payment - A typical down payment ranges from 10% to 20%. On a $100,000 home, that can be a bit pricey for a first home. Some loan programs may reduce it down to 5%, or even no down payment if you meet certain qualifications.
Creative payments - Of course, you don’t want the payments to get too “creative”. For example, a first time home loan may be set up in a way that you make smaller payments for the first few years, before they increase to their normal rate. This can be risky if you are basing your ability to repay a mortgage on the lower amount.
There are several different programs available (through lenders, or the government) for first time home loans. However, be sure to look into all aspects of any special lending offer, because sometimes a traditional loan may cost less in the long wrong. The only way to know for sure is to run through all of the numbers…and soon you will be living the dream of owning a home of your own.
© 2009 HomeLoanInfoZone.com
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