Are There Special Mortgages For First-Time Homebuyers?
Free flowing home loans used to be normal for the housing industry, but banks are incredibly selective now that many properties are underwater or in foreclosure. If you are a first-time homebuyer looking for a new loan, down payment and credit terms are increasingly tough. Take a look at some of your options through specialty loans.
Little or No Down Payment
Saving 20 percent of a property’s value for your down payment can be tough in this financial climate. Ask your loan officer about down payment assistance programs, or DAPs. Funded through government entities, including federal and state departments, DAPs have grants available, based on your income and home price. The government wants you to own your home, rather than rent, because neighborhoods tend to function well with responsible adults caring for the surrounding community, from crime watch groups to trash clean up activities.
Service Employees or Retired Persons
If you worked for the state, became a teacher or enlisted in the military, there are several separate programs to help first-time homebuyers. Each state has a different loan program to provide assistance as you finance your new home. Tell your loan officer about your service to the community to research specific loans for your unique situation.
Foreclosed or abandoned homes bring property values down significantly and contribute to local crime rates. Fannie Mae HomePath Mortgages specialize in loans to move you into foreclosed properties, even if you have a small down payment or poor credit history. Every property has a different story so ask your bank about particular homes falling under this specialty loan.
Federal Housing Administration loans are often your only choice if you have zero or little credit history. The interest rate may be steep, however. There is a smart way to create a credit history within a year. The FHA needs at least three credit lines in good standing across one year’s time. Place your home’s utilities in your name and diligently pay the bill for a year. Apply for a secured credit card, use it and continue paying the balance on time. If possible, put your apartment’s lease in your name or apply for a student loan. The bank needs to see that you are a trustworthy applicant for a home loan before lending any funds.
Buying your first home takes considerable preparation, especially if you need a specialty loan. Be patient and work diligently toward a loan approval for your dream home.
