Financing for First Time HomebuyersIf it’s the first time you’re leaving your “renting” status for a “home buying” one, you should know there are a several options that can help you finance your American dream, some complete with government incentives.
The Federal Housing Administration or FHA doesn’t make loans but they insure them. As a new homebuyer, you purchase the insurance and the government repays your lender in case you default and can’t pay your loan. The FHA has a few rules though. The down payment on your future home can be as low as 3.5% of the price of the home. Your FICO credit score must be above 580. The advantages are that the FHA limits extra charges for title insurance and escrow fees and other closing costs. You can also use gifts from family or local government to pay for your down payment. The disadvantages are that you must buy mortgage insurance. The home you’re interested in buying has to be “turn-key” shape with no major repairs needed so that you can move in immediately after purchasing it. If the property has been expanded or there’s an addition to the home, the FHA wants to see permits for the work that was done.
An FHA 203K loan allows you to buy a home that needs repairs, in other words, a fixer-upper or a foreclosure property. The repairs are for basics such as the roof, furnace, plumbing, wiring and floors. The way it works is that the potential buyer has to find three contractors that will submit bids for the jobs. The lender makes sure the contractors meet the program guidelines and the buyer employs the approved contractor. The repairs are done in phases and after each one, the lender’s inspector approves or rejects the work done. Once you’re approved for the purchase of the house and the repairs, all you have to do is pay a monthly sum to repay both the loan for your mortgage and your repairs. The one inconvenience with the FHA 203K loan is that you’ll have to have all the repairs done before you actually move in.
Another way to get financing for your first-time home is through a housing finance agency. Every state has them and they can offer first-time buyer assistance programs, grants, loans and so on in varying amounts of money. These are typically on a first-come first served basis, so you have to act fast.
VA loans also exist. If you’re a veteran, you might qualify for a VA Guaranteed Home Loan from the Department of Veteran Affairs with no down payment, just a mortgage insurance.
These are all various ways to finance your home as a first time home buyer. When it’s time to move, make sure to call the Maryland local movers to make the transition as safely and easy as possible. The All My Sons of Maryland moving team has plenty of moving experience under their belt, with four generations of movers to back us up. Let our family move yours, get your free moving quote online!