First Time Home Buyer Mortgage Options

This article explains the first time home buyer mortgage options here. First, let’s explain what a first time home buyer loan is.  The purpose of this loan product is to help people buy their first home.  Lenders overlook credit issues, debt versus income requirement, and the percentage of down payment requirement on a home.

No Money Down Loan Programs:

Secondly, the VA home mortgage loan and the USDA Rural Housing loan are the only two true no money down loan programs.  Both of these loan programs are backed by the US Government.  All other no money down loan programs have a catch.  So please read on.  This is very important!

Other First Time Home Buyer Mortgage Down Payment Assistance Programs:

Thirdly, while these other down payment assistance programs appear attractive at first, they come with several strings and requirements. Read the fine print. Understand the exact terms of your free down payment.  Although, these down payment agencies will help with your down payment, closing costs, & may allow you to buy a home that you might not be able to afford.  I can assure you there is a catch.   For starters, the interest rate is higher.  Often, one has to pay a fee just to obtain the interest rate.   Fees payable to the agency providing the down payment assistance is typical. Oftentimes, borrowers don’t care because the seller pays this cost for them in exchange for the price of the home being higher.

Don’t Care About A Higher Rate & Still Want Information on Down Payment Assistance For a First Time Home Buyer Mortgage?

Currently, we offer a 1.5% down FHA loan program for first time hombuyers or anyone who works as a first responder such as paramedics, firefighters, call center operator for 911, etc.  To qualify one needs a middle fico score 620 or higher and two years of continous employment.  FHA loans  require a full 3.5% down payment of which you need to pay 1.5%.  The remaining 2% down payment will be a gift from the lender in exchange for a higher interest rate.

How Do I Obtain The Best Loan Program:

Next, if a borrower has decent credit, has been on the job for two years, and has down payment money, they can qualify on their own. This option allows you to obtain the best mortgage rate and the lowest closing costs.

What Are Settlement Costs?

They are closing costs and estimated items. Estimated items are your home owners insurance, real estate taxes, and the days per interest fee on the home.  These are variable expenses that can change on your mortgage.  For instance, if you buy a home and your annual tax bill is $1200 for the year, there is no guarantee that next year your tax bill amount due will still be $1200.  Days per interest fee is based on the number of days starting from the ay after your loan closes through the first day of the month.  Good news though is this is a one time fee that is paid at closing only.

Closing Costs:

Furthermore, closing costs items are your appraisal, credit report fee, title fees, home inspection fee, home warranty, bank fees, and any other fee.  These fees are all set ahead of time so the fee amount cannot change.  When it comes time for closing, your estimated fees and your closing costs fees get added up together to form your settlement fees which are due at closing.

Mortgage Calculator:

You wont’ find a mortgage calculator here because we prefer one on one communciation.  You see it’s not just about how much of a total mortgage payment you can afford.  You need to make sure you have enough money to cover any unexpected event that may show up such as medical, dental, car expenses or home repairs.  All of these unexpected items will be addressed when we address the prequal process.  The mortgage calculator is a good start to estimate your purchase price.

For more information, please call our office directly and talk to a licensed loan officer at 602-358-8717.

Article 1:  First Time Home Buyer Mortgage