8 Programs & Loans For First Time Home Buyers

Purchasing your first home is one of the most fulfilling experiences; however, this task requires you to conduct thorough research. You will need to learn about the location, assess your financial position, seek for finances from different lenders, and also meet with realtors. Several people who are buying houses for the first time are not aware of the various government and community homebuyer programs that are available to assist them with the required funds.

Though the programs are not the same in all states, almost every state has a community development department that assists in matching home buyers with available financing programs. In case you are searching for a financial program to help you buy a home in Newark, CA, here are some of the first time homebuyer programs that you need to consider:

1. Housing Finance Authority’s First Time Homebuyers Program

Many community assistance programs and banks provide this program to their customers, and their eligibility is based on the location of the house and the buyer’s income level. This program offers financial assistance to buy an existing or new home for low, moderate, and middle-income families.

2. Conventional Loans

Several lenders provide conventional loans that target first time homebuyers in particular. Most of these loans only require a small down payment, as opposed to the usual twenty percent that may be discouraging to first time homebuyers. Piggyback loans (where customers take out multiple loans at one time, to make things easier) are also offered by most lenders.

3. Low Interest Mortgage programs

For low or moderate income families, some financial institutions can offer a low-interest mortgage to you, depending on your credit history, the size of your family and your household income. These programs are provided by reputable financial establishments and are different from one state to another.

4. Down Payment Assistance Programs

Several first time homebuyers lack the funds required to make a reasonable deposit when purchasing homes. These programs offer funds to cover the cost of the down payment, in the form of interest-free second mortgages. The loans target low and middle income families, and sometimes, repayment of the loan can be delayed for up to five years.

5. First Time Homebuyer Counseling

Most real estate agents and lenders conduct free seminars and workshops to enlighten first time homebuyers about the whole procedure. They may also combine these services with a special rate loan or other incentives; by attending these events you will get more information regarding the various methods of purchasing a house and maybe get financial rewards also.

6. Seller Financing

People who wish to acquire a loan, with a higher amount than the one provided by their lenders, don’t consider this option. This is a real estate transaction where a buyer receives money to close the deal from the seller, which must be repaid in regular monthly installments or as the loan stipulates. The program is a possible alternative to credit unions and bank loans.

7. Federal Housing Administration Loans

These loans are provided by the FHA, which is an arm of the government that assists people who seek to buy homes. FHA loans provide mortgage insurance to cover lenders, which enables them to offer low deposit loans. To acquire these loans, you only need a down payment of about three percent, which helps first time homebuyers to save adequately to buy a home. One needs to have sufficient income and a good credit history to qualify for the loan.

8. Private Mortgage Insurance

Private mortgage insurance is a very important thing to understand for a first time homebuyer. They may need this insurance in case they consider applying for a mortgage with a low down payment, and it covers the lender if the buyer defaults on the loan payment. Private mortgage insurance is required on mortgages with less than a twenty percent down payment. Its benefit is that when the mortgage is about twenty percent settled, some lenders will allow you to cancel the insurance.

Summary

A lot of attractive financing options for first time homebuyers are available; however, it is possible to miss the different programs presented. Consider meeting with a competent real estate agent in your area and look for the best programs and rates offered by the banks, to enable you to get the most suitable option. Remember to ask for community assistance if you are a low or middle income household, so you can take advantage of any available special programs and other incentives.