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What is there, what benefits do they offer, and for a first time buyer, is it rare to use a program or is it dumb to not use one?
You may find it worthwhile to use a first-time buyers' program.
There are many around.
Hopefully one of the bankers/brokers that hangs out will chime in.
Most are predicated on the assumption that you would need financial help, either due to credit issues, income limitations, or down payment assistance.
I have not worked with it, but if I am not mistaken, they will put up your down payment, and you would have to repay it if you sold. There are income guidelines.
Many commercial banks offer Community loans. I am most familiar with BB&T's CHIP loans. Any BB&T banker can tell you about the CHIP program. 100% funding, very near to market rate, and no PMI or 2nd mortgage.
Bank of America and Wachovia offer something similar, if I am not mistaken.
FHA can help you get into a home. Most lenders are FHA qualified.
USDA offers a program similar to FHA, although it is only funded through the end of 2008. "I.S. program" I think.
If one of these fits your need, and you don't get buried with the mortgage in something you can't afford, then, yes, it makes sense to use them.
Also be aware that most first time homebuyer programs usually have an income cap. It might be wise to know what that is before investing too heavily. A mortgage broker should be able to answer some of your questions.
I just sold a home for one of my builders that provided gift funds on a FHA loan program for the other client. They got into this home, with $500 earnest money, at the closing they received money back, because they had 100% financing!!!
However be careful with your lender, the agent that represented these clients referred them to a lender that in my opinion charged them too high of an interest rate on the loan. Of course they are lots of factors in the interest rate you get charged.
But there are some great first time home buyer programs out there, check with the credit union if you are a member at one, and the larger banks. Don't pay rent, if you can buy! And get three good faith estimates from the 3 different lenders, just have your credit report pulled by one f them and ask for your scores, you can then shop around.
( I know your score is not supposed to go up if you are shopping a mortgage in a certain time frame, however I have seen it happen to other clients, so just ask one lender to give you the scores, Moderator cut: soliciting
Last edited by autumngal; 01-10-2008 at 12:03 PM..
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Moderator cut: removed there are a few affordable home buying programs that we work with and highly recommend. Most are not "strictly" first time homebuyer programs, the important part is that you do not currently own any other homes and are going to be living in the property you are purchasing. A few are only for FTHB, but most consider you a "first timer" if you have not owned a home for >3 years.
FHA is a great option with 2.25% down (3% total investment) and and listlady mentioned you can get down payment assistance from the seller or non-profits. There are also 100% Community programs. Both FHA and Community programs have much lower MI rates than conventional financing.
The programs look at 3 things... 1 credit 2 debt to income ratios (ability to repay the debt) and 3 reserves (for emergencies). The nice part about them is that they take a look at compensating factors. If someone is a little weak on credit but has good income/job history, low debts and ample reserves they can be approved. Same thing if you have good income/debt and credit but perhaps just a little in savings.
It is not a given that you should use one. But have a broker/banker review them in addition to all the other options. Depending on your situation (credit, down payment, income) these options may or may not be your best choice.
Quote:
Originally Posted by omamia
Also be aware that most first time homebuyer programs usually have an income cap. It might be wise to know what that is before investing too heavily. A mortgage broker should be able to answer some of your questions.
That is true for the Fannie Mae and Freddie Mac 100% Community programs. In Wake and most of the surrounding counties it is ~$70,000 for a single family home. It changes every year by median income. FHA does NOT have income limits... it has max loan amount limts. For Wake County its ~$220,000 and varies by median home price every year.
Last edited by autumngal; 01-12-2008 at 10:03 AM..
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