The majority of first time home buyers find themselves in a unique predicament. In many cases, first time home buyers have little money for a down payment on a home. Not only do they typically have little money for a down payment, but they usually do not have the financial resources necessary to cover closing costs or any cash payments due at closing. However, they realize that purchasing a home is a smart investment and an excellent alternative to renting. For these reasons, lenders offer a variety of first time buyer loan programs to help first time buyers or those starting over financially to get into a home of their own. While there are a number of first time home buyer loans, all of these loans may not be right for every situation. Each homeowner will need to determine which type of loan will best suit their individual financial circumstances.
Conventional Home Mortgage
The most common type of conventional conforming or traditional home mortgages are fixed rate mortgages. Fixed rate mortgages have interest rates that will not change over the life of the loan. The term of this type of loan is generally 30 years, and these types of loans are ideal for families that intend to stay in the home for a long period of time. Other types of conventional home mortgages include fixed period ARMs, balloon loans, and hybrid loans. The type of conventional loan that first time home buyers use should be based on their financial resources and long term plans.
Jumbo Home Mortgage
Jumbo home mortgages are another type of conventional loan, but they are considered non-conforming loans. They are considered non-conforming loans because their loan limits are outside those of conventional loans. Jumbo loans have higher interest rates than other types of conventional loans. Their interest rates are higher because they are securitized by institutions other than Fannie Mae or Freddie Mac, which securitize other types of conventional loans. Jumbo loans are typically utilized on home purchases that exceed $400,000.
Other Types of Home Mortgage Plans
First time home buyers may be eligible for various types of home loan programs such as FHA and VA home mortgage loan programs as well as the fast and easy home loan program and the expanded criteria loan program. FHA and VA home mortgage loans offer down payment assistance by allowing either a minimum down payment or a true zero down payment.
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