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What First-time Homebuyers Should Know About Home Loans

home buying loans

By Saul Gross

First-time home buyers who work with us often have the same question: Should we or shouldn’t we get a first-time homebuyer loan? There are a number of advantages and disadvantages to acquiring this kind of loan. So, we thought we'd take a few moments to explain just what to expect when getting a home loan as a first-time homebuyer. This way, when the time comes for you to figure out how to finance your first home, you’ll have all the information you need at your fingertips.

First-Time Homebuyer Loans 101

A first-time homebuyer loan offers financial assistance to qualified buyers by utilizing a variety of methods:

• Very low down payments or none at all

• Subsidized interest costs

• Grants

• Forgive loans

• Defer payments

Generally speaking, the best candidates for this kind of loan are homebuyers who have never owned a home. However, buyers who have not owned a home in over three years also qualify. With this kind of loan, certain restrictions may apply in order to qualify, so it’s important to do your research beforehand. First-time homebuyers should also be aware of the specific restrictions attached to using the loan. These may or may not include:

• Being prohibited from buying homes in higher price ranges

• Being required to make the newly purchased home your primary residence

• Being prohibited from renting the home to others

These loans are great for buyers who may not be able to purchase the home without one, but there are some disadvantages to this kind of loan which include:

• Buyers are limited to the type of home they want by price range.

• Buyers may not be eligible for certain program benefits if they sell their home before a predetermined time limit.

• Buyers may have a limited number of loan types to choose from.

• Buyers may have to pay for recapture taxes in exchange for benefits they receive through the program.

For these reasons, some of you first-time homebuyers may find it just as beneficial to get a traditional loan, although this should be considered on a case-by-case basis.

We'll Help You With Your First Homebuying Experience

Call us today to find out more valuable information for first-time homebuyers. We're more than happy to give you our expert assistance, straight-forward advice and user-friendly resources.

Until next time at The Stream!

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