First Time Home Buyer Programs

Why First Time Home Buyer Programs?

The real estate market is one of the most unique and sometimes most fluctuating markets there is. With fantastic ups, dramatic lows and sometimes unexpected turns it really is something that no one can accurately predict. Regardless of all that, real estate is still the most stable investment you can make. Over time, it keeps its value and even when markets crash, the value always returns which is why the super wealthy will always keep their wealth in property.

Part of the American Dream (that most of the western world also adopted) is the idea of owning your own family home. However, in recent years the price of property has risen way above all expectations and its driven most first time buyers out of the market. If you want to buy your first house these days, you better start looking way outside of city centers as this is probably the only places where you will find something affordable. In places like London, the average house price peaked as 325,000 pounds just before the recession hit. This is more than 10 times the average salary which means first time buyers had no real chance of getting on to the property ladder.

This is where first time home buyer programs come in. Its something that’s been introduced all over the developed world as a way to stabilize and refresh the housing market. Its vitally important for “new money” to come into the market and to prevent a monopoly and over inflated prices. With government programs to assist first time home buyers, everybody gets a fair go and it helps those who really need to get out of the grips of paying rent every month.

Home buyers grants is a great incentive to also encourage development. In most countries these grants apply only when you buy a new property which is a great way to stimulate development and the building of new homes. Its incredibly important for any housing market to have a balance in rental properties – just think about it if we all had to rent and there were only a handful of landlords. They would be able to charge whatever and there would be no balance in the market place.

Getting on the property ladder is super important if you want to get ahead financially. Rent money is dead money and the sooner you buy a place, the sooner you can start building an asset that it yours. In the end you home will be one of your most valuable asset.

First Time Home Buyer Loans

For those of us who fall into the mid or lower income bracket, affording to buy a home can be near impossible at the standard rates and prices. For this very reason, there are several programs to help first time buyers get a “fair chance” to enter the property market and own a home of our own. There are countless government programs and grants to provide financial assistance, but there is one aspect I want to focus on here and that is first time home buyer loans.

Going to any bank or building society, you will be confronted with the usual BS of credit checks and large deposits. The amount you can borrow will be determined by your income and to make matters worse, lending the maximum amount can kill you financially with the monthly payments. This is where the so-called FHA loans come in.

FHA loans are part of a government initiative to help first time buyers get a home of their own. This type of loan is very different and specifically designed to help the vast majority of buyers who can’t break into the real estate market. One of the main advantages is that there is a very small 3.5 % down payment (as opposed to the absolute minimum of 10% required by banks) and your credit is largely overlooked. What this means is that for a small deposit you can secure a decent loan that will enable you to buy your first home – even if you don’t have a sound credit history.

On top of that, an FHA loan also helps you out on a monthly basis with yet another government initiative called a MIP funding tree. What this does is to help reduce your monthly payments for insurance, so it also reduces the “running costs” that often strangles first time home buyers.

So, how do you get one of these home loans? Although it’s a government run program, your local bank or building society will be able to give you more information. You can check out the government websites, but in the end you will have to work with your bank to secure the loan. They are obliged (by law) to comply with the restrictions of the FHA loans, so they can’t really rip you off. I would suggest you find someone that’s helpful and knowledgeable as the process can be complicated and cumbersome.

Common Mistakes First Time Buyers Make

The first time you buy a home can be both an exciting and a scary process. The responsibility and the pressure of committing to such a large amount of money can be scary for many and unless you do your homework you can burn your fingers. So often people pay unnecessary fees and penalties due to incompetence. Buying a house is a specialist job and unless you get the help and guidance you need, you will make mistakes. There are a couple of mistakes that I see people make over and over again…

- Not Consulting a Mortgage Broker
One of the most important reasons for consulting with a qualified mortgage broker is to pre-qualify yourself. A broker will sit down with you and help you analyze your current financial position to help you establish how much you can borrow. Knowing how much you can afford is absolutely critical to being successful.

- Only Consulting Your Bank
For most first time buyers, their local bank is the first and last port of call. The problem with a bank is that they only have x-amount of mortgage products to offer and if you don’t fir into any of them, they will either squeeze you in or reject you. A mortgage broker on the other hand will shop around and look at everything that’s available on the market and help you find something that suits you perfectly.

- Not Getting a Proper Inspection
So often young couples try and save when they buy their first home and one area they usually skim on is with inspections. Its vitally important that you get a professional inspection done before you buy a home – even when it all “looks okay”. The simple fact is that serious defects are usually not spotted by an untrained eye and if there’s serious damp issues or structural problems, a professional survey can pick it up before it becomes your financial responsibility.

Now is a great time to buy your first home. Prices are low, availability is high and interest rates very reasonable. If you combine all these factors with one of the many first time home buyer programs you can really get a great deal and break into the property market without jeopardizing your monthly budget. Stop wasting money on monthly rent payments. Owning a home is a significant asset and the sooner you start the better.

Are You Buying Your Dream Home?

For any young married couple, the idea of their first home together is both exciting and the first step to a life together. Unfortunately, this is also why so many make the first and critical mistake when they do buy and that is they over spend. In the pursuit of buying our dream home, we get carried away and end up over lending to a point where we place a lot of financial strain on ourselves and on the relationship for that matter.

The golden rule is that unless you can comfortably afford to buy the home and cover the monthly expenses, then just don’t do it. By simply buying something cheaper, fixing it up and increasing the value you will eventually be able to afford something even better. Its about having both the patience and the discipline to say no even when your emotions run wild with owning your dream home.

Its important that you talk to a mortgage broker before you do anything else. A broker will assess your current situation better than you can and he will take a host of factors into account when he calculated what you can reasonably afford. A broker will also help you get the best loan possible to make sure you get more “bang for your buck”. Not all mortgage loans are created equal. It’s a bit of a minefield out there and unless you get some expert guidance you are likely to lose money somewhere down the line.

Buying a home – especially if its your first home should be primarily focused at getting unto the property ladder and escaping the never-ending loop of paying rent. This is a very positive step regardless of what you buy and by simply getting started you can easily move on to the point where you can finally afford your dream home.

With the last major market crash there was a lot of lessons to be learned with thousands of home owners losing their homes. If you were in that market and you pushed yourself to the limit of your financial capacity, then you were likely to be one of the first to get culled and lose your home. I’m not saying another crash is on its way, but always be prepared and be sure that you can withstand difficult financial times without losing your home. In the end there is no point owning your dream home if you can’t afford it.