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Chapter 02: Resources for First Time Home Buyers

Save more, spend smarter, and make your money go further

In our home buying series, we’ll be going over everything there is to know about buying a home, including how to save for a house, the ideal credit score when buying your first home, the different types of mortgages for home buyers, and more. 

So now that you have a better understanding of the benefits of buying a home vs renting one, we’ll discuss some resources and guides for first time home buyers. 

Being a first time home buyer is a big responsibility, and you want to make sure you’re thoroughly prepared for what’s in store. The best way to ensure that is by doing your research about homeownership and using the right resources to guide you throughout your journey.

In this blog post, we’ll be going over the advantages of being a first time home buyer, important questions to ask yourself before moving forward, the resources you need for your first time home buying, and more. 

The process of buying your first home can be overwhelming, but using the right resources for a first time home buyer will make the experience a little bit easier. Continue reading to find out more about what first time home buyers need to know. Use the links below to easily navigate Chapter 2.

Advantages of Being a First Time Home Buyer

Owning a home is something you work towards for years. Owning your own home means you have the freedom to decorate as you please, but it also is an opportunity to lay down your roots and create a home for your family to grow up in. Besides those obvious benefits of buying a home, you may be wondering about the benefits you get as a first time home buyer. There are many advantages for a first time home buyer, such as:

  • Assistance programs available: First time home buyers have access to a variety of different assistance programs, depending on where they live. For example, if you or your spouse is a veteran or a member of the armed forces, you may qualify for a VA loan, which doesn’t require any down payment.
  • Lower down payment options: There are a variety of low down payment options available for first time home buyers. Having a lower down payment means you can buy a house sooner and start building equity, but it can also lead to more expenses for first time home buyers, like a higher interest rate and mortgage insurance.
  • Tax benefits: One of the main incentives of buying a home is the tax benefits. For instance, a first time home buyer is eligible for tax deductions on interest and property tax payments. These deductions can lead to better tax returns and more savings.
  • Increased stability: Owning a home often means more stability, with both your life and your monthly payments. As a renter, there’s always a possibility that your landlord increases your rent. But as a homeowner, your monthly mortgage payments will most likely remain the same.
  • Growing your wealth: If you’re looking for a stable way to grow your wealth, owning a home can be a good way to achieve that. When you buy a home, your property can potentially appreciate in value over time and, if you sell it for more than what you paid, you can make a considerable profit.

What Resources Are Available to You?  

There’s no doubt that becoming a homeowner is an intimidating process, but fortunately there are resources available that can help guide you. While making a large down payment means you’ll pay less in mortgage payments, that’s not always an option for everyone. Typically, people focus on building a savings before buying a house, but that doesn’t mean that all of your money should go towards your down payment. And in this case, these resources can be beneficial for you:

  • FHA loans: These are loans backed by the Federal Housing Administration and require just 3.5% down, so it’s a very popular type of loan among first time home buyers.
  • VA loans: These are loans that require no down payment and are available to service members, veterans, and their surviving spouses. 
  • USDA loans: These loans are targeted towards people in rural and suburban areas and typically don’t require any down payment.
  • Fannie Mae and Freddie Mac: These are conventional loans that require as little as 3% down.
  • State-sponsored first time home buyers programs: These are state and local programs that offer assistance to first time home buyers who live in eligible locations.
  • Home renovation loans: These loans enable you to buy and remodel a home with just one loan.

How Resources Can Vary By State 

The loans you can get as a first time home buyer vary by the state you live in. Some states also offer tax credits that you can use on your federal tax return. The first time home buyer assistance programs are intended to help people buy homes in particular areas. 

One of the biggest errors first time home buyers often make is overlooking these guaranteed loans that are designed to help people buy homes. If you’re thinking about buying a home, consider looking into what resources your state offers.

What Do You Need to Know? 

There is a lot to know as a first time home buyer. You need to start saving early so you can afford various costs of buying a home, including the down payment, closing costs, and move-in expenses. It’s important that you know how to budget for homeownership so that you can have a sufficient amount of money saved up. 

Buying your first home isn’t something you can just do overnight. Typically, people plan at least six months in advance before they even start thinking about going through the buying process. One of the most common mistakes of first time home buyers is not saving enough money. You don’t want to wipe out your entire savings account to be able to afford a home.

The Buying Process for First Time Home Buyers  

To begin the buying process, you have to choose a mortgage lender who will help you decide which type of loan is right for you. Once you have decided on a mortgage lender and a type of loan, then you need to get pre-approved for your mortgage. 

Then comes the fun part: actually shopping for a house. For most people, it may be a good idea to hire a real estate agent who can help you navigate the home buying process. Once you find a home that you love and can see your future in, then you can make an offer.

What Are the Most Important Topics of Discussion You Need to Have?  

Before you can start with the home buying process, there are several important topics you may want to think about, such as:

  • What you can afford
  • How much you’re going to put down
  • Whether you can qualify for a mortgage
  • How long of a mortgage term you should get
  • What your must-haves are for a house

Most Common Questions From First Time Home Buyers

Naturally, you’ll probably have a lot of questions as you move toward this major milestone. Here we’ll answer some of the most common ones to help get you off on the right foot.

What Are the Biggest Challenges Facing First Time Home Buyers? 

One of the biggest challenges that first time home buyers face is not having enough money for their down payment. Traditional mortgages typically require you to put down a fairly large portion of the home’s price upfront—sometimes 20% or even higher depending on your credit and financial circumstances—but there are other types of mortgages for first time home buyers that require much less.

Another big challenge is not having enough credit history. Having a good credit score is crucial in order to buy a home, so if you haven’t already, you may want to focus on building up your credit. One fairly easy way to do that is with a credit card. If you’re uneasy about getting a credit card, you may want to consider one with 0% intro APR or a secure credit card which limits how much you can spend.

Which Type of Home Will Best Suit Your Needs? 

Buying a home is a long and arduous journey, so you want to feel confident about the house that you buy. But deciding which type of house that’s best for you can be difficult. As a first time home buyer, you may want to take the time to sit and really think about what type of home will best suit your needs. 

Think about your wants and needs in the present, but also in the future. For example, if you’re thinking about starting a family while you’re living in this house, you may want to choose something bigger.

Which Specific Features Would Your Ideal Home Have (Or Not Have)? 

In addition to the type of home that you want, you also need to think about specific features that you want your home to have. Is a basement a necessity? What about a pool or big backyard? How many bathrooms and bedrooms do you need? Do you have certain requirements for the kitchen? These can all be helpful questions to ask yourself before you start your home shopping process.

The Bottom Line: The Steps Towards Homeownership

Having a basic understanding of the resources that are available to first time home buyers can help you feel better prepared throughout your home buying process. Hopefully, the tips and resources we’ve listed above are useful in making your journey as smooth as possible.

So now that you have a better idea of the resources that are available when buying a home for the first time, you can move onto Chapter 3, where we’ll cover how to save for a house.

Save more, spend smarter, and make your money go further

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