Friday, February 22, 2008

Encouraging Tips for First-Time Home Buyers

One of the most important things that individuals, couples, and families enter into in life is the purchase of their first home. While the benefits of owning a home are wide-ranging, home ownership provides the chance to build equity and allows individuals to take advantage of one of the largest tax breaks known to consumers. Below you will find a few tips for first-time home buyers looking to make the smartest home purchase transactions and investments for their future:

Paying Off Debt

While it seems like a good idea to save as much money as you can for the down payment of a home, this common mistake for first-time home buyers ignores the nagging necessity to pay off other debt first. Extra cash should initially go towards paying off credit card debt and other high-interest responsibilities. In the long run, you will finish further as credit card debt is expensive and ultimately limits your ability to save.

Figure Out What You Can Afford

To make sure you can handle the financial obligation of purchasing your first home, it is wise to figure out how much you can afford. This process will include how much you are able to borrow and how much of a down payment requirement you can satisfy. Usually, it is suggested to follow the premise that your annual mortgage payment, taxes and homeowner's insurance should not go beyond 28% of your gross income. Additional monetary allowances you should also figure out include closing costs and the potential for various home repair issues that sometimes arise once you have moved into your new residence.

Loan Shopping

Locating the best loan for your individual circumstances is highly recommended and may require a little bit of research. A first-time buyer with steady employment and good credit can purchase a house without the prospects of leaving a down payment. Others must find loans that will cater to their current situation. It is also important to weigh all possibilities, including private lenders and local banking institutions when making a final decision.

Credit Worries

Some individuals fear their lack of perfect credit will hinder their ability to purchase a new home. Today, there are more and more possibilities to consider, such as the Fannie Mae "expanded approval" program, which helps consumers with blemished credit reports qualify for mortgages at competitive rates (sometimes two percentage points lower than other modes of financing). Other loans, such as the FHA-insured option presents no income limits and is especially helpful for those with low-to moderate incomes looking to buy their first home.

Down Payment Assistance

There are assistance programs that help low- and moderate-income families purchase their first home. Younger home buyers may qualify for a grant or in some cases loans are given to home buyers with a couple of strings attached, including the agreement that they must stay within the home for at least three years. The down payment assistance program caters to consumers who earn no more than 80% of a region's median income.

Successful Home Searches

To get an idea of the kind of homes available to you, one may use Internet searches to browse hundreds of listings, check out virtual tours, and view tons of photos and aerial shots of potential neighborhoods. This process will also help you pinpoint the kind of house and neighborhood you wish to live in. Close to 80% of all home searches start with the World Wide Web. It is also important to shop around and not set your eyes on the first property you see there is always something more accommodating just around the corner.

Jim's articles are from extensive research on each of his topics. You can learn more of home equity loans and buyer tips by visiting: First Time Buyers



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