Having a place to call home is everybody’s dream. It’s no surprise why so many of us toil over years of hard work just so we can afford this most priced reality. Ironically, those who are on the final steps of their journey find themselves anxious and often unsure of just what to do next.
Indeed, buying a home could be downright intimidating, especially if you’re a first time home buyer. Yet, although there’s no clear-cut route towards a fast and glitch-free home purchase, being adequately prepared and knowing what to expect is a great way to keep the anxiety at bay.
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Before you sign any deal with any lender, know the terrain first. Learn everything you can about the process, especially if you’re using financing to purchase the home.
If you’re like most homebuyers, you’re using a mortgage to buy your first home. But there are different types of mortgages. Depending on how the interest is structured, it could be a fixed-rate or adjustable rate mortgage. Specialty mortgage programs also exist. These are those home loans that are insured by specific institutions or those that are specifically designed for first-time home buyers.
Whether you are a military service member or are a couple looking for a low down payment mortgage option, there are mortgages that just might be the right program for your needs.
FHA Mortgages
FHA home loans are mortgages backed by the Federal Housing Administration. It’s a program that specifically caters to cash-strapped first time home buyers or those who are finding it hard to comply with the conventionally required 20 percent down payment. It’s also a favorable program for borrowers with non-stellar credit ratings.
With an FHA loan, a home buyer can purchase a property at only 3.5 percent minimum down payment. However, the buyer would need to pay an upfront and ongoing mortgage insurance premium.
USDA home loans
The US Department of Agriculture offers home buyers assistance programs. No, you don’t need to live in a farm to qualify for the loan. You only need to meet the income and property standards set by the department.
USDA mortgages specifically aim to help low-to-moderate income borrowers in designated rural areas. The department has a clear designation of which properties are considered to be in a rural area. The borrower must not be earning more than an area’s median income.
If you can qualify, you have the chance to receive 100 percent financing with very competitive interest rates. The department also allows borrowers to roll the costs of closing into the loan.
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Good Neighbor Next Door Program
A program sponsored by the US Department of Housing and Urban Development, the Good Neighbor Next Door Program was originally called the Teacher Next Door Program but later on expanded to include other public service personnel such as officers of law enforcement and firefighters, among others.
The Good Neighbor Next Door Program allows qualified borrowers to get a 50 percent discount on the list price of homes within designated revitalization areas. These homes are listed on the program’s website for a limited time (typically within 7 days). The program requires the borrowers to use the property as their main residence for at least three (3) years.
VA Mortgages
Just like the USDA home loan programs, the VA mortgage is a specialty program exclusively offered to the country’s military service members, both reservists and those on active duty.
VA home loans offer 100 percent financing with lenient underwriting standards. Aside from offering one of the lowest interest rates existent anywhere today, they also don’t require the payment of a private mortgage insurance even when the borrowers decide to get the full 100 percent financing privilege. The only cost the borrower is obligated to pay upfront is the VA funding fee.
Fannie Mae and Freddie Mac programs
Government service enterprises Fannie Mae and Freddie Mac partner with your local lenders to provide mortgage programs that help borrowers get affordable mortgages.
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