The Best Home Lender for First Time Buyers

When you are first time home buyer, finding the best home lender is a very important part of the home buying process. Since you have never been through this process before, you need someone that will take you by the hand and walk you through everything. Locating someone that specializes in first time borrowers would be ideal, because they are used to the process. While it may not always be the case, any lender that works with the FHA would most likely be your best bet as a first time home buyer. They are set up to help first time home buyers in a number of different ways. Here are a few things to keep in mind before you get involved. 

Low Down Payments

One of the best things about working with the FHA for a first time home buyer loan are the low down payment options. They have some of the lowest down payment requirements in the industry. Typically, you will only have to come up with 3.5% of the purchase price. Traditional lenders require 10 to 20% down payment amounts, which are huge savings. Many first time home buyers have problems saving up a large sum of money for a down payment. This program allows those with lower amounts of cash to get involved in real estate. 

Low Interest Rates

FHA loans offer competitive rates. FHA loans are backed by the Federal Government so lenders and banks know that their investment is a lot safer than with a typical loan. As a result of this, they will give you a lower interest rate since their risk requirements have been met. Finding a program with a low down payment and a low interest rate can help you out a lot as a first time home buyer. It will make your monthly payment smaller, which in turn makes life much easier to navigate. 

Easier Approvals

Another great thing about FHA loans is the ease with which you can get approved. Since the FHA is backing the loan for you, this increases the likelihood that you can be approved. Ultimately, the credit decision is made by the lender that you choose to work with. However, their job is much easier when they know that the FHA is backing the loan. If your credit is borderline of being able to be approved normally, the FHA backing can put you over the top. For many people it can make all the difference in getting approved. 

The FHA only stands behind 50% of the loan. Therefore, the bank still has some level of risk involved in case you default. For this reason, you will have to have at least decent credit in most cases. The bank wants to know that the 50% that they are ultimately responsible for has a good chance of being repaid. 

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