First Time Home Buyer Programs
Nov 21st, 2007 @ 10:03 AM by MortgageMentor
I am not sure when it started, but at some point in our home buying history, first time homebuyers got brownie points from banks. Whenever I host home buying seminars, people always want to know about these programs. However, over the years as a loan originator I have learned that when someone asks about first time home buyer programs, it really means that they don’t have any money for a down payment.
In my experience, being a first time home buyer is irrelevant for most transactions. Banks are more concerned about your job stability, income, credit, and debts than they are about your home ownership history. Most buyers who have prepared themselves financially to buy a home usually do not benefit from being a first time home buyer, but are able to find more competitive loan programs in the free market even if they need 100% financing.
With that said there are often local and state programs available for first time home buyers or people who meet other qualifications. For instance, many states and county governments have bond programs that offer lower than market interest rates. Some even offer down payment or closing cost assistance.
While these programs are great, you have to view them in the context of what is available to you as a home buyer in the free market. Often times, these programs may come with restrictions that make them uncompetitive with regular mortgage programs. For instance, many may have recapture clauses that force you to pay back the “benefit” you received if you sell within a certain time frame. Some may not allow for subordinate financing which may force you to take a loan with expensive private mortgage insurance. Others may have income or loan size limitations.
I have seen a number of buyers choose first time home buyer programs because they sound good, but actually wind up costing some buyers money because they could have qualified for a better loan elsewhere. However, these loans and programs are some times much better alternatives than sub prime financing. It really depends on your particular situation and needs.
As a consumer, you need to ensure that you are working with loan officers who are aware of the various programs that are available to you. Another good source of special programs are community groups and credit counseling services.
MORTGAGE WORKS has always been known for the high quality of character, professionalism and knowledge of products that our Florida mortgage brokers bring with them. MORTGAGE WORKS is capable of originating and processing all types Treasure Coast mortgages and Port St Lucie loans for 1st Time Home Buyers.