First Time Home Buyer

When it comes to firsttime home buyer loans, a little research can save you thousands of dollars over the life of your mortgage.

A wise consumer selects a mortgage lender prior to shopping for a home. You see, firsttime home buyer loans can end up costing you a lot more than you bargained for if you shop for your home first.

What often happens is you fall in love with a beautiful home that is on the outside range of what you can afford. And because you have invested interest in this particular piece of real estate you're more inclined to go into a loan situation you can ill afford.

To make sure you can realistically afford your mortgage payments, it's best to understand all the potential costs upfront before you fall in love with that dream home that is really outside your financial comfort zone.

It will take some research and comparison shopping in order to find both the best lender and the best in first time home buyer loans.

The loan package best suited to your needs will offer you terms you can handle now and in future. It's important when looking for firsttime home buyer loans you take into account your future plans. For instance, are you planning on starting a family? If so, it's important to consider the potential reduction in your family finances if you or you spouse decides to take some time off to raise the child(ren).

Further, if you have poor credit, you'll be required to pay a higher rate of interest than those who have a good credit rating.

When it comes to first time home buyer loans, the amount of your down payment will also be taken into account when your interest rate is calculated. Think of it this way, the larger the down payment, the better the interest rate. So, before locking yourself into one of the firsttime home buyer loans currently on the marketplace, you'll want to consider the advantages of contributing a decent down payment. This will keep both your interest rate and your payments much more reasonable.

Among the options for first time home buyer loans are variable rate and fixed rate mortgages. The first fluctuates over the course of your mortgage and the later keeps payments the same.

Another factor to consider is your debt to income ratio. In other words, the amount of money you bring in opposed to the amount that goes out. When determining your debt to income ratio you must take things like car payments, student loans and credit card balances into account.

There are programs available to assist firsttime home buyers in obtaining a loan. Talk to your lender and do some research of your own to discover the best option for you.

Remember, when shopping for first time home buyer loans no question is stupid. It's very important that you understand the ins and outs of any mortgage loan prior to signing on the dotted line.

Article Source: Paul Jesse

The subprime mortgage real estate fiasco has created a glut of residential real estate in the real estate market. Foreclosures are on the rise and it doesn't look like the end is in sight for at least another year. Thousands of home owners are losing their homes because adjustable mortgage rates have adjusted upward and caused increases of monthly mortgage payments so high that the affected home owners just can't make the payments. It is inevitable, under these circumstances that many homes go into foreclosure and banks have to take them back.

While it is unfortunate that many home owners are losing their homes, the opposite and upside effect is that the real estate market is now a boom for the first time home buyer.

Mortgage interest rates are still low and banks and real estate lending institutions have 30-40 year fixed loans for home buyers. With home values in many areas around the country, such as California, plummeting anywhere from 30-50 percent of what they were a year ago, the market is wide open for buyers who have never owed a home and would like to do so now.

Lending institutions and sellers are very motivated now and are readily lending their ears to home buyers saying "lets make a deal" and deal they will. Here are some of the innovative and sensible ways home buyers can now acquire a home of their own when they are armed with some real estate homebuyer education.

1. Use government grants and loans for down payment assistance.

The federal government in 2003 established the American Dream Down Payment Act. This federal law has allocated $200 Million a year since 2003 to assist with arranging down payments for first time home buyers. This is a good indication of just how serious the government is about helping Americans make the American dream of home ownership come true.

Fannie Mae, one of the many federally supported programs for home buyers has programs such as the MyCommunity Fixed Rate Mortgage. This unique program is ideally suited for the first time home buyer. It provides for low down payment, high loan to value with broad flexibility, including nontraditional credit considerations allowing for the buyer to qualify for the loan. It also has special financial options to serve public servant professions such as teachers, police officers, firefighters and health care workers, and people with disabilities.100% financing is available with 30-40 year fixed rates. Check out the details at [http://www.efannie.com].

These funds, in addition to other government funding sources, are made available through federal, state and local government agencies that provide down payment assistance to their citizens on a case by case basis.

Every major city and county has one of these programs. One need only exercise a little initiative and these funds can be acquired. Contact your local housing authority, city managers office or county administration department to find out about them and how to apply.

2. Use non-profit agency down payment assistance

Another little known, but long existing opportunity for first time home buyers to acquire help with down payment assistance is the numerous numbers of non-profit agencies around the country that provide free down payment assistance to home buyers. The Community Reinvestment Act of 1977, enacted by Congress in 1977 and revised in 1995, requires banks located within identified communities to make loans and reinvest the depositors' deposits within that community.

For decades now and continuing into the future banks have been making huge amounts of funds available to invest in targeted communities. However, the availability of the funds was not publicized in a significant way and many people did not and still do not know about these funds. Many non-profit agencies became aware that they could help in the community revitalization effort by creating a means whereby the banks could channel the funds through various home assistance programs that non-profits created. The non-profits that specialize in this type of program have grown over the years. Some are very large and are nation wide such as the Nehemiah Corporation - http://www.nehemiahcorp.org.

They get funding from the banks via the Community Reinvestment Act and other funding sources and then provide for down payment assistance and other housing assistance to persons desiring to own a home.

One of the high points of these programs is that the funding is often times not limited to first time home buyers and certainly is not limited to only low income home buyers. This creates yet another source of down payment assistance for the prospective home buyer. Given the numerous avenues of funding to assist in buying a home and the present market swing in favor of home buyers, buyers are now firmly in the driver's seat.

Article Source: Roy Landers

It seems that everyone loves a good real estate story. The media is filled with reports about soaring property values and home owners of modest means becoming instant millionaires when they sell. As a result, many first time home buyers, afraid of missing out, will rush into buying decisions and achieve less-than-spectacular results. As a first time buyer, your biggest challenge is to balance livability and profitability in a way that makes sense for you and your family. Remember, you are buying a home first and an investment second. Of course, there's no foolproof formula for buyer success, but there are steps you can take to stack the odds in your favor:

If you're waiting for prices to drop in places like Southern California, Washington D.C. or Miami, you may be waiting a very long time. In regions that are built out with limited room to expand, it's not realistic to assume property values will fall dramatically. Of course, prices in the nation's super-heated residential markets (much of California, Nassau-Suffolk Counties in New York, South Florida) should cool down at some point, but there's no guarantee that higher interest rates won't eat up any savings from a price correction. If your personal circumstances say it's time to buy, high prices alone shouldn't keep you on the sidelines. Current interest rates are still historically low, so you may consider locking in a mortgage before rates head north. Even in booming markets, there are good deals for those willing to devote some time and energy to finding them.

There's an abundance of free and low-cost resources for homebuyers on the Web. A Web search can turn up helpful articles, buyer guides, online tools and purchase/ refinance calculators. Keep an eye out for helpful tools like step-by-step guides and checklists to help organize your search. Some Web sites now offer online tools to help you estimate home prices and search for undervalued properties. Many offers on the Web for free property valuations actually are come-ons from real estate brokers looking for seller listings, so check first to see what strings are attached.

Real estate's old guard seems to be under assault at every turn today as traditional brokers battle competition from discount and Web-based brokers. Today, buyers have more options than ever before. You can use a full-service broker, discount broker or buy without a broker. To make buying more affordable, consider the homebuyer rebate programs that are becoming more popular. Rebates can help offset closing costs, which are a real obstacle for many first-time buyers. Be aware that some states currently ban real estate rebates all together, and others limit rebates to credits applied to closing costs. Rebate fans around the nation are keeping a close eye on Kentucky, as the Justice Department recently sued the Kentucky Real Estate Commission for violating antitrust laws. Kentucky is one of 15 states that ban or limit real estate rebates.

To save time and trouble, first time buyers should have a realistic budget in mind before they shop for homes. One way to determine how much house you can afford is to get "pre-approved" by a lender. Pre-approval means you know exactly how much of a loan you'll qualify for, so you can limit your search to homes in the right price range. Pre-approval also boosts your credibility and negotiation position with sellers. Most lenders will offer pre-approval as a no-obligation free service, in hopes of winning your business.

The Department of Housing and Urban Development (HUD) advises home buyers to create a wish list to help focus priorities. That way, you'll remember that a spectacular foyer is nice-to-have, but safety and services are essential. Having clear goals will help keep you from getting carried away with emotional factors. Sellers who love their homes tend to ask too much, and buyers who fall in love can end up overpaying. With a little research, you can get can get an objective estimate of property value to make sure the seller has set a fair asking price. There are tools and resources on the Web to help you better understand home valuations.

Once you understand the buying process, you should understand and budget for transaction costs. In addition to your down payment, buyers pay most of the closing costs when purchasing a home, including things like inspection fees, title insurance, taxes and more. Closing fees can add up to 5-7 percent of purchase price, and must be paid before you get the keys. Your lender can provide what's called a "good faith" estimate of your closing costs. Most closing costs are not negotiable but some are. When you're comparing lenders, don't be shy...ask which fees are negotiable, then ask if any discounts are available. Finally, be cautious about "no-cost" closing promotions because the lender may be simply passing on the costs in the form of a higher interest rate.

Buying a home is a big investment and a big decision, but you don't have to go it alone. Remember, at each step of the way, there are people and resources to help you. Use the Internet and ask friends for referrals. Don't be afraid to pick up the phone and call real estate professionals, mortgage providers, title companies and insurers to ask questions. These professionals should be good resources to help you learn more about home buying, because they want to earn your business. If they are not helpful, then you have also learned something important...that they don't deserve your business.

Low credit ratings mean that buyers won't qualify for the best available interest rates and fees, which could mean considerable extra expense each month for the life of the loan. Most financial institutions today offer risk-based lending - lower credit risk for lenders means better mortgage deals for customers. Credit reports frequently contain inaccurate information, which can hurt a buyer's purchasing power. First-time buyers should check their credit scores and fix any problems before applying for financing.

Author Stephen Covey's advice for effective living also applies to effective home buying. Resale may not your primary consideration, but it's an important factor. Can you buy in an up-and-coming neighborhood or region? How is the "commutability" from your new home to local employers? How good are the local schools? A few queries to your favorite search engine will turn up free or inexpensive school rating services. Also be on the lookout for outdated features when you buy. If the those small closets and harvest gold appliances seem out of step now, you can bet that they won't look any better to prospective buyers in a few years.

Article Source: Charles Warnock