Is There Help for First Time Home Buyers?
Are you renting? Living with your parents in order to save money? You may not be doing yourself the favor that you think that you are. In most circumstances, becoming a first time home buyer is actually much cheaper than renting, and getting the down payment together may not be so difficult as you fear. There are many different mortgage loan options you have that could make buying a house much easier to do than you think. Before you send out another rent check, look into the various loans and assistance programs that you can apply for, and all of the advantages that go along with home ownership.
Over time, the costs of home ownership and a mortgage are less than the costs of renting. On average, home ownership is cheaper than renting for anything of at least a five year period. So in other words, if you plan to rent for at least five years, chances are good that you'll pay less overall if you buy your own home. Home ownership carries several other advantages as well. When you own your own home, you can make improvements to it that increase its value, and your net worth. Every mortgage payment you make increases the percentage of the home that you own for good. Every rent payment that you make gives you a month in somebody else's home. If your loan has a fixed interest rate then your mortgage payments will remain the same. Rent tends to increase over time. Mortgage interest is tax deductible, rent is not. When you own your own home, you and your family have a secure place to live. When you rent, you live in your home only as long as somebody else does not tell you to leave.
If you are looking to buy your first home then the Federal Housing Administration, or FHA, might be able to help you. They insure loans from mortgage bankers for first time home buyers (and other buyers, but the first timers often find FHA loans a popular choice) that finance up to 96.5 percent of the total cost. This means that you might pay no more than 3.5 percent of the price up front. Most of the fees and closing costs will be included in this down payment. The loan comes from a federally-approved institution, such as a bank, mortgage company, or savings and loan company. All FHA loans are insured by the Department of Housing and Urban Development. To find out if you qualify for this loan, go to the FHA website.
If you don't currently own a home and make no more than 15 percent more than the median income in your area, a good credit history, and can afford the mortgage and tax payments, then you might qualify for a guaranteed housing loan with the U.S. Department of Agriculture. There is no set down payment required, and the loam is financed over 30 years. For more information, go to the USDA Rural Development website. Alternatively, if you have a low or very low income and wish to buy a home in a rural area, then you could qualify for a direct housing loan from USDA Rural Development. These loans can be financed for up to 38 years in some cases.
Help for first time home buyers often comes in the form of local grants and solutions. Call your local or state housing department for information on government help or charitable organizations that can help.
Remember, in addition to all of its money-saving advantages, home ownership also provides certain more abstract advantages. People who live in a house that they own, that they intend to live in long term, tend to have stronger community connections. This sense of home and belonging is even more valuable to some people than the savings are. If you do not own your own home, then get out there and start looking into your home buying options. You owe it to yourself.
So, while help for first time home buyers isn't an all-inclusive solution, you have many options for financing that first house. Check out your options with the free guide below.
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