All renters reach this point at some time and want to say "enough is enough". You send your landlord a check every month, which he or she turns around and uses to pay their mortgage on the home they own but you live in. Guess who's enjoying all the increase in value and end of year tax deductions for mortgage interest and real estate taxes: Your landlord. If you've reached this point, you're ready to become a first time home buyer.
While you may be a bit confused, do not be afraid, as there are choices for first time home buyer assistance available to help you purchase your first home. First time home buyer financing is available from a number of national, regional, and local sources. Regardless of the amount your budget allows, you might qualify for the first time home buyer mortgage that will allow you to enjoy home ownership, receive the tax considerations you deserve, and to stop paying someone else's mortgage.
First Time Home Buyer Information You Must have
Here are some tips to prepare you for the sometimes mysterious world of real estate purchases and home ownership. This information should help to de-mystify this important subject and help you get that first property.
- Collect your income and current debt paperwork and information in its entirety. Sure, this might, at first, appear to be an annoying task. So what! It is very important to have all your current income and expense information at hand.
- Get hold of a First Time Home Buyer Guide to financing your first property. Guides of different quality, variety, and level of detail are available through the Internet, mortgage lenders, and even local or regional semi-government companies that offer first time home buyer programs.
- Investigate local, regional, or federal government programs that might offer a first time home buyer grant. These are sometimes available for smaller amounts that help with deposits, larger amounts that might allow you to rehabilitate a home needing repairs or improvements, or even those that might give you significant funds to fully complete a purchase.
- Learn the "language" of the real estate and mortgage industries. Many first time home buyers would tell you that much of the apparent confusion that affects new real estate buyers results from a lack of understanding of many of the terms and names for components to actually making a real estate deal happen. Become familiar with as many terms as you can.
- Learn how a first time home buyer loan works. Use the Internet to learn how common mortgage loans work. Then examine some first time home buyer programs to learn how they work and, also, how they sometimes differ from classic mortgage loans. Many programs are tailored to help you get that first home rather painlessly.
- Learn how "locking" an interest rate can help protect you. If you are like many people seeking first time home buyer financing, you may be working on a very tight budget. To avoid an unpleasant surprise if interest rates move up during the processing of your mortgage application, you might want to "lock" your rate at application for around 30 to 60 days. If you close your loan within the lock period, you are guaranteed to receive the rate you've been quoted. This will protect you from a potential future qualification problem since you've already been qualified for the loan you want by your lender.
- Become familiar with a standard mortgage application. A standard mortgage application (often called a "1003") captures all the information a lender needs for the majority of mortgage loans. If you're dealing with a first time home buyer government agency or a lender with a special program, there may be some additional information required, but these items are focused on helping you close a loan. You should be able to download a 1003 from the Internet or obtain a blank one from a local bank or mortgage lender.
- Learn how so-called "government loans" work. FHA Loans (Federal Housing Administration) and VA Loans (Veterans Administration) offer low or no down payment terms for first time home buyers. Neither FHA nor VA actually makes mortgage loans, but they do guarantee most or all of the loans made by other lenders. They both have some additional documentation requirements, but serve a valuable function in helping first time home buyers purchase their homes.
- Evaluate closing costs, not just interest rates. Unless the great aunt you never knew from Omaha just left you, her favorite nephew or niece, a large sum of money in her will, you're probably watching every dollar to make a real estate purchase work for you. Extensive closing costs can cost you money you don't have for expenses you don't need. Compare closing costs to get a better deal.
- When you find the first time home buyer mortgage loan you like, don't wait - go for it! Rates, terms, and programs can change rapidly in times of industry uncertainty. Hesitating rarely works in your favor for the following reasons. If the rate drops or terms are modified, you might save some money. However, if the original program and lender you like seem to work, you can go forward with comfortability. Should rates or terms change for the worse, you might have a real problem depending on your income and debt situation. In extreme cases, the purchase deal won't work at all and you'll be back at ground zero. The rewards of possibly catching an interest rate or terms break is not as critical as a negative rate or terms change right before you make application. Don't forget, you're probably not the only one interested in the home you're trying to finance. You don't want to lose your first property. Submit your application as soon as you feel ready.
There Is Plenty of Help Available for First Time Home Buyers
First time home buyers sometimes feel they are facing a daunting, difficult task. Actually, both mortgage lenders and the U.S. government are willing to give you all the help you need to make your dream of home ownership a reality. Use the Internet, visiting helpful websites like boemortgage.com, to find mortgage programs that fit your budget, lifestyle, and future plans. If you follow the ten tips noted above, are realistic about the price of homes you consider, have your income and debt documentation ready, and learn how to complete a mortgage application properly, you stand an excellent chance of buying your first home with a mortgage loan you can comfortably live in and enjoy.