Young families have benefited immensely from the current home loans programs that are meant for first time buyers. Earlier on, it was quite hard for young people to access a home loan since they had just started working and most of them were paying back the enormous student loans. The housing industry has formulated various creative home loans that target first time home buyers, who had been denied a chance by the stringent regulations in the industry. These programs aim at providing financial assistance to first time qualified buyers. Although these programs are varied, they all aim at assisting the first time buyers through:
•Permitting a low, or no down payment.
•Subsidizing the interest rates.
•Limiting the fee charged by lenders.
It is important to note that first time home loans might not have all the benefits mentioned, but will often have a few. It is therefore important to research all the programs available and settle for the most beneficial one.
The government also offers assistance to first time buyers through the U.S. Department of Housing and Urban Development. This department gives funds to municipalities and states annually to be distributed to moderate and low income families for closing costs and down payment. Potential homeowners can get approximately $15,000 for a home loan. Sometimes, this money given out as a home loan is totally forgiven as long as the home buyer makes a promise to reside in the house for three to five years. Some government programs give out ten percent of the house price. However, this down payment assistance is only given to low income earners—people who earn less that 80 percent of the median income in the region.
A first time buyer hoping to obtain a home loan should communicate with the state housing finance agency to obtain information on the various online programs that are available. Prospective home buyers should also visit local community organizations and churches to inquire about the grants and home loan assistance programs available.
Restrictions of First Time Home Loans
Most first time home loan programs have certain restrictions. Firstly, you cannot purchase an expensive prime property in a posh neighborhood, but instead you will be allowed to buy a cheaper home in a less affluent area. This is because these programs only target people who are in need of owning a home despite its location. Secondly, these programs demand that you have to live in your home for a certain period of time so they are not an option when you want to rent out. Lastly, the home you purchase must be in a good state and meet the current building material safety regulations.
Pitfalls of First Time Home Loans
Programs that target first time home buyers provide home ownership to people who would not have managed to purchase a house. However, some of the pitfalls associated with these programs include:
•These programs offer cheaper homes, which might not be your ideal choice
•If you sell your home within a short time, you loose some of the benefits
•The choice of loans types is limited as these programs normally offer the 30 years fixed rate mortgage.
Kevin Robes is a famous blog writer and he writes for Homeloans.org. His writings cover all kind of home loan options.