FAQ for First Time Home Buyers

By: CL Haehl

First time homebuyers are faced with a myriad of questions about the process of buying and financing their first home. Luckily, there are countless programs available to first time homebuyers to help them realize their dream of owning a home.

What is The Definition of a First Time Borrower? You may be surprised to find out that a first time homebuyer is almost always defined as someone who has not owned a home in the past three years. Even if you owned a home for twenty years, if you sold it four years ago and haven't owned a home since then, you are considered to be a first time homebuyer.

How Much Do I Need To Put Down? Many first time homebuyer programs are designed to allow you to put down as little money as possible for a down payment. There are conforming programs such as "My Community" that require the buyer to contribute only $500 of his or her money towards the purchase of a home. Even closing costs can be financed into the loan!

What Does My Credit Score Need To Be? For borrowers with credit scores considered average or better (620+), there are programs that will let you finance 103% or even 107% of the purchase price of a home. The remaining 3% or 7% can go towards closings costs such as processing fees, title fees and even opening an escrow account for taxes and insurance.

What If I Have Credit Problems? For those with less-than-perfect credit or income that is difficult to document, lenders have programs available that allow 100% financing, usually down to credit scores of 580. Even with lower credit scores (or no credit), a good mortgage broker can help you creatively finance the purchase of your new home, especially if the seller is willing to help with closing costs or by holding a second mortgage.

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