Benefits for First-Time Home Buyers
Nothing epitomizes the American dream like buying a home. It’s something most of us associate with “making it” as an adult. There are many benefits to home ownership. First and foremost, your home is an investment. The value will grow over time, unlike a car whose value depreciates as soon as you drive it off the lot. You also gain equity in your home the longer you stay in it, making you more financially stable, not to mention the tax benefits that come from mortgage deductions.
While buying a home is a smart financial move, many people feel they aren’t in the position to take the plunge. The costs of purchasing a home can be daunting, and saving up for a down payment is tough. Luckily, there are options for first-time home buyers that help ease the burden of down payments and other costs, making the track to home ownership easier to accomplish.
First-time home buyer loans
FHA Loans. The Federal Housing Administration (FHA) provides loans for first-time homebuyers who have a credit score of 580 or greater. These loans require only 3.5 percent of the purchase price for a down payment and offer competitive interest rates. For people who haven’t been able to save up a lot for a down payment or whose credit score is less than stellar, this is a great option. Just keep in mind you’ll also have to pay for mortgage insurance, which makes your monthly payment a little higher.
VA Loans. For people who have served in the military, a VA loan might be a good option. These offer 0 percent down options and don’t require mortgage insurance. There are some restrictions on the type of home that can be purchased, but it is set up for primary residence and designed to get service men and women into homes after leaving the military.
USDA Loans. These loans are similar to VA loans in that they provide 100% financing with no down payment required. They have restrictions based on location (typically has to be a more rural area) and some restrictions on condition of the home, and they have a restriction based on total income earned in the home.
Creative Financing. Many banks and financial institutions offer special deals for first-time home buyers who meet specific qualifications, such as a certain credit score and proof of income and other assets. Like the FHA loans these offer 3 percent down payment options, and many require mortgage insurance, but the insurance might cost less than what you’d have to purchase through the FHA.
Down Payment Assistance. There are several different options available for down payment assistance, which is money provided by loans, grants or tax credits to help with a down payment and closing costs. The NC Housing Finance Agency offers down payment assistance of $8,000, and various local counties and cities that offer down payment assistance of $10,000 to $15,000. There are various options to pursue, which can be explored by speaking with a Realty One agent. We can recommend lender options to a home buyer.
Steps to Take
Before looking for your dream home, make sure you’re ready financially. Do the work you need to get your credit score up so you will be able to qualify for a good home loan. Shop around at banks to see which one offers the best interest rates and programs. And while you don’t need to have a lot of money for a down payment, you will want a little savings to help pay for things like updates for your new house and a moving truck, or at least some pizza for your friends who help you move!
Once you’re financially ready, you’ll want to work with a qualified real estate agent to help you find the perfect house and walk you through the process. Contact our team at Realty One and we’ll get you set up with the perfect agent.