As a first-time homebuyer, you may be faced with obstacles such as less money in your savings and a lack of credit history. While this can feel like a roadblock, there are several first-time home buying programs designed to help homebuyers get that perfect home they’ve always wanted.
First-Time Home Buying Programs
At BrightPath, we have first-time home buying programs with lower down payments and lower credit requirements to help make that goal of owning your first home more attainable. If you’re a Georgia first time homebuyer, here are a few loan options that might work for you:
30-Year Fixed Mortgage
A 30-year fixed mortgage is a great option for new homeowners looking for stability. This loan program offers a repayment period of 30 years with an interest rate that stays the same during the life of the loan—unless you choose to refinance. This loan offers predictable interest rates and a monthly payment lower than shorter-term loans.
It’s important to always consider the disadvantages as well as the advantages. With the 30-year fixed mortgage, while it may have lower monthly payments, because of the longer loan term than, say, a 15-year fixed rate mortgage, it ends up being more expensive due to the larger amount of interest you pay over the entire loan time. However, if you want to know what you’re paying each month and desire lower monthly payments, the 30-year fixed rate is a good first-time home buying program to consider.
Adjustable Rate Mortgage
An adjustable rate mortgage is an interesting first-time home buying program because the rate remains fixed for a certain period such as 5, 7 or 10 years, but at the end of this period, your interest can rise or fall depending on the market. One of the good things about an adjustable rate mortgage is that the interest rate is usually lower during the initial fixed period. You can get a lower interest rate compared to a 15 or 30-year fixed rate mortgage because you’re not paying for those years of rate security.
With an adjustable rate mortgage, it’s important to keep in mind that the housing industry can be unpredictable. If you plan to sell your home in the future, it’s hard to tell what the market or interest rates will be like then. Keep an eye on the market to make sure you don’t lose any money in your investment.
If you plan on refinancing or moving within 5 or 10 years of buying your first home, an adjustable rate mortgage might be right for you since they usually offer a lower interest rate during the initial fixed period.
FHA loans are backed by the government and insured by the Federal Housing Administration (FHA) compared to conventional loans which are backed by private lenders and banks. FHA loans are one of the popular first-time home buying programs since they usually require a lower minimum credit score and down payment compared to some conventional loans.
While an FHA loan is great for the lower credit score and down payment perks, it does come with a higher risk of default. This means you’ll have to pay up-front and annual mortgage insurance premiums (MIP) since this helps compensate for the lower credit score requirements in case you default on your loan.
So, while the interest premiums can be high, if your credit score isn’t where you’d like it to be or you’re looking for a lower down payment, you might want to consider an FHA loan as one of your options.
At BrightPath, we can help you determine which one of the above first-time home buying programs works for you, and even suggest other desirable loan options. To get the most out of your first-time home buying loan, give us a call today at 888-222-6003 or complete our online form so one of our experienced mortgage specialists can help you find the right program for you.