There are so many loan programs giving first time home buyer assistance. One should choose the best option for themselves. The government divides mortgage into two. That is qualified mortgage loans (QM) and non-QM loans. Lenders prefer the QM because they do not lead into law suits. This is why non-QM on the other hand become more costly and with higher rates. Non-QM is good in the sense that one can be able to purchase a property not allowed in the guidelines for example non-warrantable condos and condotels. After housing event, no fore closure, short sale or deed in lieu.
One should work on their debt to income ratio which is considered by lending companies before they issue loans. This is the ratio between your income and the total expenditure which includes one’s monthly account payments, including credit cards, housing, student loans and auto loans. Personal living expenses are not inclusive. Divide that by your gross monthly income.
First time home buyer assistance includes looking at the rates and choosing the best option. These rates can vary regarding an individual’s situation. The available rates for one to choose from are;
Adjustable rates. These rates are very good for someone who is anticipating an increase in income or a financial grant or something that will make him or her more economically empowered than the current state. They are very low in interest rates during the first phase of the term before the amount is re-adjusted. This amount is determined by the market conditions and it’s however not the best because one can be surprised when the conditions in the market are not favorable.
Fixed rates. They are uniform throughout the term and can be the best option because at the long run, one is able to save some money.
FHA mortgage insurance program. FHA and HUD give mortgage insurance. Eligibility is determined by the FHA’s approval. The popularity of these loans originates from down payments being very low as well as the interest rates. The requirements are not so strict but one has to have a credit score of at least 500 pints.
USDA loans are supported by the federal government with an intention of rural development. It is intended for borrowers who are not able to qualify for other conventional loans due to low income. One’s salary should be 115 percent lower that the adjusted median income of the people in the location. It must be noted that the home should be in the rural areas. They have very good interest rates.
Veteran affairs loans are meant for soldiers and other people in the service. They are fully financed and one should produce a certificate of eligibility. The rates are very good compared to other loans.