| So, you want to buy a home. I congratulate you. Now, | | | | entitled to a refund of this insurance premium. Check |
| you need to know what first time home buyer | | | | with your lender about this. |
| programs are right for you. Where do we begin? | | | | VA FIRST TIME HOME BUYER PROGRAMS |
| Let's get down to the basics. First you want to have | | | | Now the VA loan program is even better. However, |
| your credit file in order. By this I mean, no collections or | | | | you must be a veteran to take advantage of these |
| late payments in the last 2 years. Assuming this is the | | | | first time home buyer programs. When it comes to |
| case, you can begin shopping around for some first | | | | credit, the VA loan works much the same way as the |
| time home buyer programs. There are plenty out there. | | | | FHA home loan. So I'm not going to spend much time |
| But, for the sake of time and space in this article, I'm | | | | on this. VA loans may allow a little bit lower credit |
| going to share with you two options. FHA and VA. | | | | score. With the VA home loan, the down payment and |
| Once you get a feel for these two programs, you will | | | | MIP is a horse of a different color. VA loans require |
| have the knowledge to talk the talk and walk the walk. | | | | NO DOWN PAYMENT. Yes they are 100% financing. |
| There are others programs however. | | | | Again this is a benefit for veterans only. |
| FHA FIRST TIME HOME BUYER PROGRAMS | | | | The mortgage insurance premium is another reason |
| Now, hands down the FHA is one of the best first | | | | the VA loan is for first time home buyers. They do not |
| time home buyer programs. Why? It has relaxed credit | | | | have any MIP to be paid. HUD guarantees the loan |
| standards over the conventional loan and also has a | | | | 100%. However, there is a VA Funding fee which |
| low down payment feature. | | | | could range from 0-3% of the loan amount. If the |
| First let's talk about the credit requirements. In the past | | | | veteran is injured in combat and can have this |
| FHA would let you buy a home without any credit | | | | documented by the VA, then it is 0% funding fee. |
| score at all. Now they seem to be requesting a score | | | | So unlike the FHA loan which your loan amount and |
| around 620. This is still lower than a conventional loan | | | | payment increases slightly, with a VA loan the |
| which requires 700 and above. A credit file is not all | | | | payment amount does not increase, but the loan |
| that hard to build if you do not have one. Talk with a | | | | amount may increase because of the funding fee. |
| large national lender about this. Look for a loan officer | | | | This is the best loan option if you ask me. |
| that has years of experience with FHA home loans. | | | | Let me tell you a brief story about a VA loan I did |
| He/she can give you some ideas. | | | | several years ago. There was this really nice couple |
| When it comes to a down payment, FHA since 1934 | | | | with one child that wanted to buy a home. They came |
| has offered this 3% low down payment option. This | | | | to me for a mortgage. After talking with them I learned |
| makes it possible for you, the first time home buyer to | | | | he was a veteran. When I discussed the benefits of a |
| get into a home with very little money. In fact, the | | | | VA loan they got excited. He was an injured Vet and |
| down payment can even be a gift from a relative or | | | | had the paperwork to prove it. He had been |
| charity. I've written other articles about down payment | | | | permanently injured in the face because of shrapnel. |
| assistance, which are awesome when you see how | | | | So a long story made short, they bought a house for |
| they work. You can in effect buy a house with no | | | | $97,000 with no money down and no VA funding fee. |
| money down. | | | | If I recall the maximum out of pocket he put into the |
| FHA loans do have MIP or a mortgage insurance | | | | deal was less than $600. Now they are buying a |
| premium of 1.75% of the loan amount. You have to | | | | home for less than what they were paying in rent. |
| pay this up front at the loan closing. This amount is | | | | Again, what VA offers is one of the greatest of all |
| added onto your original mortgage amount. So it | | | | first time home buyer programs. |
| increases your payment by about .55% of the loan | | | | Explore all your options when looking for a mortgage. |
| amount until you pay off the mortgage. | | | | Ask questions of your loan officer. Be sure to get your |
| If you ever go to sell a house that has FHA mortgage | | | | education first, then go looking. |
| insurance on it, or pay off the loan early you may be | | | | |