What is a First Time Home Buyer Loan?

If you have never bought a home before or have never gotten a mortgage then you are probably considered a first time home buyer. While being a first time home buyer does allow you some access into some buying programs, it doesn’t necessarily mean that you should use a first time home buyer loan. There are some of these first time home buyer programs that will have some restrictions and some strings attached that you will want to be on the lookout for. These can be a perfect fit for some people and the devastatingly wrong choice for other people. It will really depend from person to person.

So one question you may ask yourself is what is a first time home buyer loan? When someone buys their first home it is going to be a big deal and event. It is going to take a lot of time, effort, energy, and money to make it all happen. To help with the money part of the purchase, some people will use a first time home buyer loan. These programs will vary depending on your location but, for the most part the way that they work is that they give some financial assistance to qualified individuals. Some of the ways that this can be accomplished is offer a very low or no down payment, offer subsidized interest costs, and limit the fees that lenders can charge and some other examples like deferring payments. Do some research to see what types of offers are available from all of the lenders in your area. The HUD website is a great place to start your researching.

Just because it is called a first time home buyer loan does not mean that you have to have never owned a home to be eligible for first time home buyer programs. If you have owned a home before but, have not been able to find a home within the last three years then you could very well qualify. Keep in mind that you might have to meet certain income restrictions in order to become eligible for the subsidized first time home buyer loans. These programs are set up to help individuals that have lower income levels. If your yearly salary is too high you might not be able to acquire these benefits.

As good as this whole thing sounds there are some restrictions for first time home buyer loans. Most of the time the programs will put a dollar amount limit on the properties. So there is a good chance that you will not be able to buy the more expensive homes in a neighborhood. Also, you will have to live in the home as your primary residence. In most cases you will not be able to use the home as a rental. There are some physical and safety requirements that the property must meet in addition being in good condition.

For some select home buyers, these types of program can put you in a perfect position. They can be the difference to you getting your first mortgage and not getting your first mortgage. Neighborhoods also benefit because most first time home buyers are proud of their new home and want to take care of it rather than a renter might not take as much pride. Even so, there are still some reasons that this can be a wrong choice for you. You might not get the home that you wanted, there might be some prepayment penalties, you may have to share the increase of the home value with the lender, and your list of loan types can become much smaller.

In closing, one the best things to do regardless of whether you are trying to buy a home or trying to make a big financial purchase is to always explore all of your options. The first time home buyer loans will look attractive but, make sure that you are going to be saving money and not paying out more over the life of the mortgage. Also, don’t forget to try and have some fun with this. Buying a home doesn’t always have to be a miserable and very stressful experience.