Wow! Buying your first home is one of the coolest events in one’s life. There is a sense of accomplishment and pride when you sign your name to that bottom line. We want to help every new homeowner find exactly what they’re looking for in a home, and that includes shedding some light on the numerous first time home buyer grants out there.
How to Find First Time Home Buyer Grants
Every few years it seems like our congress passes a law initiating or extending a home buyer program. These can be found simply by googling “first time home buyer grants”. Yes, we could list a government website, but these web pages can often be in legal-ese and hard to find. Instead, third-party organizations have great articles that compile many of the first time home buyer initiatives onto one easy-to-read write-up. It’s important to note the date while reading such articles for many of the first time home buyer grants expire.
Another way to find out about first time home buyer grants is by asking your qualified home mortgage agent. They stay up to date on the rules and regulations of these grants so they can help each homeowner that walk through their doors. It doesn’t hurt to do your own research before talking to a mortgage agent. You can bring up the grants that you’re interested in and the mortgage agent can shed light on the ins and outs of the rules; together you can decide 1) if you qualify for the grant and 2) if you want to take advantage of it.
Beware of Marketing
We love our mortgage agents! After all, they help us through the long process of qualifying for our home purchase. However, as professional real estate agents, we want to inform you of the marketing tactic that some mortgage companies use to attract first time home buyers. Some companies tout “Special first time home buyer financing available!” or something similar. It’s important that you know that this is a marketing tool used to attract buyers. Ask the agent if the company is offering special financing support for first-time buyers or if they are promoting loan programs available to all home buyers.
Financial Support vs. Loan Programs
First time home buyers should know the difference between financial assistance and loan programs. Financial assistance mean there is some monetary gain or relief given to the buyer. This can come in the form of down payment assistance, tax credits, below-market rate housing (special housing units sold below normal costs of a specific area), as well as special programs for critical community jobs like teachers and firefighters. Many of the financial assistance programs come with stipulations: you may have to buy in certain neighborhoods or live in your house for five years.
Loan programs, on the other hand, are available to all home buyers. Depending on your situation, it may make sense to take advantage of them. Two loan programs that are particularly advantageous for the first time home buyers are:
- FHA loans. These loans are good for first time home buyers that don’t have a lot saved. allow you to buy a home with as little as 3.5 percent down. This loan program doesn’t require you to have large amounts of money left over after you close and it allows co-signers as well as gift funds to be used for down payment. Here’s a FAQ on FHA loans.
- Fannie Mae and Freddie Mac 3 percent down programs. These loans allow you to put just 3 percent down, and the mortgage insurance you pay for the low down payment is often cheaper than FHA loans.
Private lenders make these FHA, Fannie Mae, and Freddie Mac loans to you, but the government backs these loans. That means that if your default on these loans, the government takes the risk of paying them back. It might sound awesome, but there is a caveat: these loan programs require buyers to carry private mortgage insurance (PMI), which gets included in your monthly mortgage payment. This can add $100 per month to your mortgage payment.
Home Buying Assistance Programs in Arizona
AS we mentioned, the home buying assistance grants are always changing, but you can find an updated list of programs as well as the guidelines of qualification for each here.
For more information about finding the perfect home for you and for a reference to the best mortgage agents in the state, contact our office today. We want to help you find your dream homes and save you money doing so.