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What Is The First Time Home Buyer Program?

A first-time buyer (FTB) is a term used in the United States and Canada, as well as other countries to describe a potential home buyer who has never owned a home before.

A first-time buyer is usually desirable to a seller because they do not have to sell a house, which makes the process less complicated.

Before acquiring their first home, a first-time buyer must consider a number of variables, including how much money they will need for inspections, down payment and closing costs, as well as how much they can afford if they need to acquire a mortgage.

Home ownership is considered a normal step in the life cycle and is the easiest way to build wealth. Home ownership rates in Canada and Australia are among the highest in the world (all above 65 percent). At roughly 80%, Ireland has one of the largest proportions of owner-occupiers in the EU.

What Are The Benefits of First-Time Home Buyer Programs?

First-time home buyer programs, grants, and special loans provide financial support to buyers who satisfy certain income requirements and have acceptable credit scores. Those programs may apply to people who have never owned a property or to those who have previously owned a home but haven’t owned one in the last three years.

These programs can help you in a variety of ways, such as:

  • Grants: Some cities and counties will give you money for a down payment and/or closing costs.
  • Reduction of closing fees: Some loans include a limit on the amount of closing expenses that can be charged.
  • Savings on interest: Some organizations offer to pay or subsidize mortgage interest, or to assist borrowers in qualifying for lower-interest loans.
  • Down payment assistance: Some programs allow homeowners to make either a minimal or no down payment.

Some of these services may not be available in your area or for your particular situation. There are certain limitations, such as financial need, so do your homework or chat with a mortgage professional to determine whether you qualify.

First Time Home Buyers Guide

Step 1: Figure out your budget 

You don’t want to end up with a house you can’t afford, so be honest with yourself, your real estate agent, and your mortgage lender. Calculate how much you’ll be able to afford each month, taking into account maintenance costs and allowing for unexpected expenses. Consider what would happen if one of your income streams disappeared, either by choice or due to a layoff or other unforeseen circumstances, if you’re buying with a partner or spouse and you each have an income.

Step 2: Get quotes from at least three lenders

One of the most critical tasks in obtaining a mortgage is to shop around. Compare all of the terms offered by each lender, including the APR (annual percentage rate), fees, and other closing costs.

Step 3: Get preapproved for a loan

Before you start looking for a property, get preapproved for a mortgage with the lender you’ve chosen. A pre approval shows sellers that you’re serious about buying and allows you to shop with confidence within a set budget. In order to obtain a preapproval for a loan, a lender will examine all elements of your financial life. (Keep in mind that a pre approval isn’t a guarantee that you’ll be approved for a loan; that won’t happen until you’ve been approved by the underwriter.)

Step 4: Find a good real estate agent

Working with a real estate agent who is familiar with the area you want to buy in will be very beneficial to your search. You want an agent who can help you find the right home, negotiate the best offer and recommend other professionals for any projects you want to do once you move in.

Step 5: Shop for your home

Make sure your agent understands what you’re looking for, and do your homework on the properties you’ll be seeing as well as the community. It’s a good idea to visit the neighborhood you’ll be moving to at different times of day, on weekdays and weekends, and speak with neighbors. Check flood, earthquake, and fire hazard maps as well.

Step 6: Make an offer

Discuss a reasonable offer with your real estate agent, and be prepared for some back-and-forth negotiations with the seller. Because the home market is so competitive these days, you’ll almost certainly have to compete with other potential purchasers. Nonetheless, it’s critical not to go overboard with your offer. It’s easy to let your emotions get the best of you at this point. Be prepared to walk away from a home no matter how much you love it if the payment is above your threshold.

Step 7: Negotiate closing costs

Any real estate transaction includes closing costs, which can be paid in a variety of ways. They could be paid for by the seller, the lender with a higher interest rate, or by the buyer. Depending on the location and housing market, the sellers may not be willing to pay closing costs if there are multiple buyers interested in that property.  

Step 8: Hire a home inspector

Once you are under Contract, have it inspected properly. You want to make sure your new home doesn’t have any structural problems or anything else that could cost money to repair. Inspections often take a couple hours and the cost is around $300 but could be as much as $500, depending on the size of the home. However, the expense is well worth it; skipping this step would be a mistake.

Step 9: Get homeowners insurance and finalize move-in details

The mortgage lender will always require homeowners insurance to protect your investment. Get quotes from various firms or deal with an insurance broker who can shop prices for you, much like you did with your mortgage. You’ll also need flood insurance if your house is in a federally designated flood zone. Make sure the policy is binding and in force on the closing date. Contact your local utility, cable, and internet providers to schedule new service for your move-in date as you prepare for move-in day. Don’t overlook the most crucial tasks and find a competent mover.

Step 10: Seal the deal at closing

Just before closing, you’ll need to submit updated pay stubs and other financial documents to show that your employment situation or income hasn’t changed. You’ll typically schedule a final tour of the property within 24 hours of closing to ensure that any required repairs have been made and that the home is vacant. You’ll sign paperwork to settle the financing and transfer ownership of the home from the seller to you at the closing table. If funds are needed at closing, you will need to bring a cashier’s check made payable to the Attorney or Title Company, or wiring the funds is another option. Also, don’t forget to bring your photo ID. You’ll be handed the keys to your new house after signing the closing documents, and you’ll be a first-time homeowner.

What qualifies you as a first-time home buyer?    

According to the agency, a first-time buyer is “someone who has not owned a primary residence for the three years before the date of purchase of the new home.” This applies even if their partner has owned a home in the last three years.

Do you have to pay back first time home buyer grants?    

Rules vary based on the Grant you receive, but many Grants require repayment if you move within either 10 or 20 years.

What is down payment for first-time buyers?    

Most first-time home buyers will need to put down at least 3% of the purchase price for a conventional loan, or 3.5% for an FHA loan. You must meet certain criteria to qualify for one of the zero-down first-time home buyer loans.

For more information contact the mortgage experts at Mortgage Rates Today at 877-879-7775