Buying a new home is an exciting time for anyone, and the current housing market is considered a buyer’s market. Now may be the time more than ever to buy a new home, especially for first time home buyers. The excitement of buying a new home is greatly increased for first time home buyers. There is a lot of unfamiliar territory that new home buyers will come across when they are buying their first home. First time home buyers are advised never to be in a rush when buying a new home. In fact, a first time home buyer should do more research with how the buying process works more than shopping for a new home.
There are certain mortgage programs that are specifically designed for first time home buyers. First time buyer’s mortgages are offered in a wide variety of ways. FHA loans are loans that are designed for low income individuals. First time home buyers will often be considered low income, but this isn’t always the case. Those who are first time home buyers with a low income are advised to apply for an FHA loan. First time buyer’s mortgages are typically designed with a low fixed rate.
In fact, first time home buyers are advised to apply for a low fixed rate mortgage instead of an adjustable rate or variable rate mortgage. Adjustable rate and variable rate mortgages have rates that change, which could create a financial hardship on the homeowner. A fixed rate mortgage has an interest rate that will never change, unless the homeowner refinances their mortgage. First time home buyers are also advised to download copies of home buyer guides that are made available online at many major financial institutions. Understanding ones credit history is another factor to consider when buying a home, especially if it’s the first time buying a home.
There are advantages and disadvantages to first time buyer’s mortgages, but these mortgages shouldn’t be the only option that first time home buyers should consider. Mortgages that are designed for first time home buyers typically offer low or no down payment programs. There are other programs that offer subsidized interest costs, grants, deferred payments, and limited fees. These programs are specially made available to first time home buyers. The disadvantage to these types of mortgages is the fact that first time home buyers are limited to the amount they can borrow to buy a house.
There are other programs to consider when buying a new home, like the VA loan. In some cases, the VA loan will present more options to a first time home buyer than mortgages that are designed for first time home buyers. However, a home buyer may want to take advantage of both programs by using a first time buyer’s mortgage for a first home and a VA loan for a home in the future. Programs like FHA loans have some pitfalls that home shoppers should be aware of. For example, FHA loans are limited in the amount in which the borrower can receive to buy a home.
If the amount of the mortgage is limited, the home shopper may not come across a home they would like to purchase. FHA loans are designed for low income families and individuals that present the home buyer a limited option with the area and the type of home they will qualify for. New home buyers who are not concerned with these limits are advised to use a first time buyer’s mortgage or an FHA loan when buying their first home. The homeowner still has the opportunity to earn equity in their home for a future home purchase.