If you have never purchased a home before, first time home buyer loans can help make your dream of home ownership come true. Special financing for those purchasing a home for the first time often stimulates growth in communities, which is why so many programs exist today. The federal housing program offers some help in this area, but other programs can be funded at the state level or by foundations that are private. However, before you decide to take out one of these loans, it’s important to understand more about them.
First time home buyer loans – what you need to know
First, it’s a good idea to take a look at a little history. Back in 1934 the Federal Housing Administration, or FHA, was created to help provide insurance to institutions of lending so they would offer home loans to buyers purchasing for the first time. These efforts were broadened by transferring the authority to HUD, or the Department of Housing and Urban Development. At this point, the FHA provides more loans for first time home buyers than any other program.
The benefit of the first time home buyer loans
The main benefit of these special loans is that it helps younger adults starting out a better chance to own a home. It also helps older adults that have a limited income to be able to own their own home as well. It reduces down payments and can help to finance the closing costs so buyers don’t have to pay them up front. Of course, one of the main purposes of this program is to keep the economy healthy.
Different types of first time home buyer loans
Although the FHA provides more first time home buyer loans than anyone else, there are still other options. Many states have initiatives as well that can act as a supplement to the loans from the FHA. Private charities also offer special loan options to new home buyers that meet specific requirements. The good news is that there are plenty of options out there to those purchasing their first home.
Important Warning
Although these loans make it much easier for you to purchase a home for the first time, there are a couple warnings you need to keep in mind. First, if you go with a FHA loans, you’ll find that it may take longer to close than other loans. For this reason, some sellers don’t want to get into a contract with buyers purchasing their first home. You also should realize that an inspector that is FHA certified will need to approve the home’s condition and the loan hinges upon this approval. You also have more restrictions with this type of loans. The loans from the FHA are usually a 30 year mortgage on a fixed rate and they don’t offer the flexible options that other loans may provide.
If you’re purchasing a home for the first time, help is available in the form of the first time buyer home loans. However, just remember that these loans may have more restrictions. Many first time home buyers find these options to be helpful. However, consider all of your options before you make a final decision.