First Time Home Buyer Basics
Everything you need to know to buy your first home.
If you are like most people, purchasing a home is likely the largest single financial transaction of your life. Because of this, it is very important to work with a licensed and very experienced local Loan Officer who will show you the ropes, explain everything, and guide you to a successful closing.
There are many different first time home buyer programs, along with various down payment assistance programs. Many factors come into play to determine which programs work best for you. including your credit, property location, debt-to-income ratio’s, and more.
Determining which program is right for is sometimes hard for mortgage professionals, let alone a typical home buyer. We suggest you stop trying to figure it out on your own, and let our expert do it for you.
Typical assistance comes comes in two forms: A first time home buyer program, and/or a down payment assistance program.
Common elements may include below standard market interest rates, reduced private mortgage insurance costs, smaller down payment requirements, expanded debt-to-income ratio’s, and the most popular part, down payment assistance.
The programs are typically offered by local mortgage lenders like us, and almost never by the big banks or big internet companies. They usually are offered in conjunction with Federal, State City, or County government entities, and some non-profits and corporations.
Free First Time Buyer Guidebooks
View, download, or print our FREE handy first time home buyer books.
123 – The First Step
The first step in the home buying process is to get Pre-Approved for financing.
There are just a few main criteria mortgage lenders look at to determine if you can get a loan
1) How is your credit?
2) Is your job and income stable?
3) How much can you safely afford in a house payment?
4) How much money do you have, how much money will you need for down payment and closing costs?
Generally speaking, if you have OK or better credit, have been at your job awhile, have a little money in the bank, and buy a house you can afford – getting approved for a home loan is pretty easy.
If you have bad credit, it is unlikely you will get any down payment assistance program. Most assistance programs require a minimum middle credit score of at least 640.
If you have a credit score over 580, it potentially possible to get an FHA loan with a small down payment of at least 3.50% of the purchase price.
Because of the numerous factors to consider when purchasing a home, it’s important to prepare as best you can. At FirstTimeHomeBuyer-MN.com, we are dedicated to finding the loan that fits your individual needs.
Sign Up for First Time Home Buyer Classes
Home Buyer Education Classes
Many first time home buyer programs DO NOT REQUIRE you to take any home buyer education classes – But many do.
ALL down payment assistance program REQUIRE you to take a first time home buyer class.
Most people don’t want to bother taking a class if it isn’t necessary. Therefore it is wise to get pre-approved first to see if you even need a class.
Grants or Loans?
Most down payment assistance programs are loans, which need to be paid back. Some allow you to pay the loan back when you sell or no longer occupy the home as your primary residence. Others require you start making payments on the assistance loan right away in conjunction with the main loan.
Where Does The Money Come from?
Most of the money for any down payment assistance comes from bonds issues by the local city, county, or state giving the assistance. Because of this, many programs come and go, as the money source may dry up for the year.
Other programs, like the very popular MHFA (Minnesota Housing Finance Agency) program is a State of Minnesota program, and never runs out of money. We are proud as a company to be a big provider of MHFA loans in MN.