First Time Home Buyer

Many potential first time home buyers are wondering what to expect when they approach a lender given the latest developments in the whole mortgage mess we are in.  Will the required down payment be more than 5 – 10%?  Are there any 0% down payment programs out there for first time homebuyers anymore?  How does the first time homebuyer sort through all the changes that are taking place anyway?

Many first time home buyers have these questions as well as other pertinent questions on their minds.  This is in part because of the current credit crunch that the United States is experiencing.  The answers?  Yes, there are 0% down payment programs available for the first time homebuyer still; however, many have stricter qualifying regulations.  Being aware of the changes in the rules can help avoid stress and confusion during the buying process. 

One of the first and most important things to consider is that credit scores are more important today then they ever have been.  Chances are if you have any blemishes on your credit score at all a lender will not want to extend a 0% down payment loan to you.  Therefore, before even beginning the process of pre-approval or shopping for homes and or lenders you will want to pull your own credit report.  You can actually do this once a year for free from each of the three main credit agencies.  Look at the report to see if there are any items listed that need your attention.  Dispute anything that is not correct, if something has been paid in full but is not reported as such you can have that changed before a lender looks at the report.

You are likely to find that lenders are getting rather restrictive on a whole and particularly with the ratios that they use when qualifying for a loan.  For instance, if you need private mortgage insurance, which is generally required for people who put less than 20% down, then the private mortgage insurance company might require a larger down payment.  They may simply allow a smaller ratio as well; this will end up lowering the total amount that you are able to borrow.  It is competitive today and despite the fact that people want and need to move the huge number of available homes off the market lenders want to make sure they will not be foreclosing on a home because of defaulted loans too.  Fully understanding all the rules and doing the foot work first is very important in this tougher mortgage environment; however, doing so will put you ahead of the game and help to secure your mortgage and your first home.

The recently launched web site, www.federalhousingtaxcredit.com, that was developed for the newly signed tax credit law has brought over 100,000 visitors.  This shows that there is a rather strong interest of first time home buyers wanting to take advantage of the temporary incentive.  The $7,500 tax credit is available for all first time homebuyers who buy a home from April 2008 to July 2009.  The tax credit was signed in hopes of encouraging potential first time homebuyers to take advantage of the surplus of available homes and buy now.  Many potential first time homebuyers have hesitated as the economy continues to dip; however, now is a buyer’s market and a great time to take advantage of the falling home prices.

According to the National Association of Home Builder’s President Sandy Dunn, in response to the number of hits on the website, “The initial response is encouraging”.  She goes on to say, “This could be the trigger that helps move prospective first time buyers off the fence and back into the market.  But it won’t last forever.”  The tax credit that is drawing so much attention is a part of several provisions that have been enacted into law recently that was meant to get the housing market and the economy back on their feet, so to speak.  The attention and number of hits is encouraging but time will tell.

The popular web site offers useful information regarding how the tax credit will work and includes the requirements for eligibility.  So far the site has attracted nearly 120,000 hits which work out to nearly 10,000 per day.  Details, questions and answers regarding how first time homebuyers can take advantage of the credit is divided into four user friendly sections:

• Tax Credit at a Glance:  Providing an overview of just how the credit works this section is valuable to the visitors who are just hearing about the tax credit incentive.
• Frequently Asked Questions:  This section offers an easy to understand common questions and answer format and contains basic information regarding the tax credit.  This includes the definition of a first time homebuyer, the homes that qualify for the credit, the income limits that will qualify as well as the payback provision and other common questions and concerns. 
• The Law’s Other Provisions:  This section offers a summary of a number of provisions from the Housing and Economic Recovery Act of 2008 in addition to the tax credit.  This section will offer information on how to prevent foreclosures, revive the housing market and how to make the nation’s economy stronger.
• Home Buyer Resources:  This section offers links and resources that will make the buying process simpler and smoother for the first time homebuyer.

The efforts of the website and the Act come at a time when the housing market is in crisis and the number of foreclosures is increasing steadily.  The crisis casts a shadow of gloom over the economy on the whole and by stimulating the housing industry with relief and incentives there is a hope that will move that shadow away and offer a ray of hope and sunshine.

The headlines are full of disappointing news regarding the housing industry; however, the current flat economy is creating opportunities for many. As in many areas around the United States, people who have wanted to buy in high end areas such as Boston but could not are reaching for their dreams of finding a first home in a coveted location. It seems that the buzz word in real estate right now is opportunity. According to many real estate companies, there are a lot of great deals to be found in today’s housing market. This does not come as a big surprise to the many folks looking to buy their first home, particularly in Boston. Massachusetts home prices have fallen around 10 percent since 2005 which is allowing many first time home buyers to enter a market they previously could not afford.

One of the big draws for the first time home buyer today is the perks they are finding. With the efforts of the government, housing development centers and other incentives available first time home ownership is a dream come true for an increasing number of people all over the United States and all over Massachusetts.

Many programs in Massachusetts offer a number of resources for the first time home buyer including classes, information, guidance and even a lottery system for the individuals that qualify to purchase condominiums and homes at below-market prices. There are plenty of enticing programs available for the first time buyer as well in the Massachusetts housing. If a person works for the town or city as a teacher, firefighter, police officer or other public service position they can be eligible for lower interest rate loans. Similar programs are available for people using public transportation or who are trying to rehabilitate a home that is in rough condition.

Naturally there are conditions to be eligible for most programs in Massachusetts and other places around the U.S. Income guidelines and limits as well as other stipulations may apply; however, it is always a good idea to see if you are eligible for any incentive programs. Doing so just may save you significantly on your first home and may allow you more home than you dreamed possible.

When it comes down to it, if you are considering buying a first home, the best time is now. It is a buyers market and there are a lot of great deals and incentives available to the first time home buyer! Expect to possibly be required to take a home buying 101 class or other classes that are offered through incentive programs. Additionally the governmental incentives and tax credits are available to most all first time home buyers to try to stimulate the stagnant housing market. If you are ready the market is primed just for you, run your credit, smooth out the wrinkles and start shopping for that dream home. Make your dreams your reality while the market is yours!