First Stop 4 Home Loans

So, you’re a first-time buyer?  Lucky you!  The market has been perfect for first-time buyers these past few years – more first-time  programs than ever with down-payment assistance, lower-than-market interest rates and the lowest prices on homes that we’ve seen in years.  But, maybe you’ve heard some things about the programs that might make you think twice.  Maybe the lender you’re working with is telling you things like “you’ll have to pay a tax when you sell” or “you have to live in the house for 10 years.”  Let’s get real … can someone really make you live you your house a certain period of time?  Honestly, the stories.  So here’s the truth, the low-down on the programs that will benefit  you the most when you buy your very first house.  For the most part, we can only be a first-time buyer* once (more on this later), so now’s the time to take full advantage.

Myth:  First-time homebuyer (FTHB)  programs are for buyers with poor credit.

Fact:  FTHB  programs are for buyers with credit that meets either FHA, VA or Conventional underwriting guidelines.  These programs aren’t a free-for-all where anyone can get financing just because they’re a first-time buyer.  A lot of people think this and I wish I had better news.  Truth is, guidelines dictate what is acceptable.  The main FTHB programs have minimum credit standards — for the most part, you need a mid-score of 620 or higher.  This is just the starting point.  From there other things are looked at like past derogatory items, how recent any lates have been and even how much credit you have.  One GREAT opportunity with FTHB programs is the ability to help people with NO credit or NO score to potentially get a home loan.  We take pride in being one of the few lenders willing to do this type of financing with the FTHB programs.

Myth:  FTHB programs are for low-income households.

Fact: Of course this isn’t true.  Some of the FTHB programs have household income limits up to $92,000.  I don’t know about you, but I think this is a far cry from “low-income.”  What  may be a better statement is that FTHB programs may benefit lower-income households in terms of down-payment assistance.  This is true for a few of the programs.  For instance, the Dakota County program offers three levels of assistance and the higher your income is, the lower the assistance.  BTW, the link takes you to an older article.  Please note, the rate is LOWER now at 4.45%!

Myth:  Doing a FTHB program will slow the process, delay your closing.

Fact:  Thank goodness this isn’t true!  With any FTHB program, you’re still qualifying for a mainstream loan type — FHA, VA or Conventional.  Adding a FTHB program on top of these doesn’t delay the closing, especially if you’re on the ball. Almost all of the programs require the lender to reserve the funds via an online system — this is pretty much the extent of the legwork other than some signatures.  There is one program, the Hennepin County NSP program, that does require that you get an approval from them first prior to making an offer. On most regular loans, depending on the lender,  typical time frames from your offer acceptance to closing is 45-60 days, which is absolutely do-able with any of the programs, even the NSP program as long as you have your ducks in a row.

Myth:  FTHB programs “force” the buyer to live in their home for nine years.

Fact:  Again, this is just so silly since people can’t be forced, for the most part. to do anything they don’t want to.  The myth here is more mis-understanding.  There is a form called the “subsidy recapture tax disclosure” that states if you should sell under nine years, you may have to pay a recapture tax.  If you get assistance through a federally funded program, you will have this potential tax.  And I say “potential” because more than 80% of the buyers I have helped, this would never become an issue.  And if it did, it’s welcomed because it means they are making WAY more money than they were when they purchased.   This tax doesn’t even come into play unless THREE things happen — you sell under nine years, AND you make a gain on your home AND your household income is over the limits published in the documents you sign at closing.  I guess the main point here is don’t let someone sway you from doing these programs due to a tax you may not even have to pay.

As you can see, there is a lot of wrong information out there.  It’s important to understand the program you’re getting into, but more importantly, work with a lender that offers them and can explain why the program may be a great fit for you.  I’m sure I wouldn’t be in business at this time if it weren’t for the availability of these programs and the expertise I have and willingness to originate these loans.  They are truly one of the best opportunities to first-time buyers and I would love to help you take full advantage of what’s available to you.

*Oh, and I mentioned that earlier that you’re only a FTHB once.  Of course, this really is true; but according to the definition of a FTHB, you could not have owned a primary residence in the last THREE years.  So, if you were a homeowner 4 years ago or in the past, we just have to prove you haven’t had ownership in the most recent prior three years.  We do this by obtaining your last three years of tax returns.

This entry was posted on Thursday, April 7th, 2011 at 8:28 am by Darcy and is filed under Assistance for Down Payment, First Time Buyers, Posts. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.