FHA Programs Help First Time Home Buyers

Home ownership has always represented an important part of the American dream. 

Buying your first home can be both an exciting and daunting process at the same time.  FHA can help you with the purchase of your first home. 

How can FHA help you?  FHA can cover most of your closing costs and fees with a down payment on your home loan as low as 3.5%.  FHA annually supports numerous lending institutions so that these lower cost home loans are available to you at these reduced rates. 

FHA insures Ginnie Mae Loans for First Time Home Buyers

Ginnie Mae loans help make affordable housing a reality for millions of low- and moderate-income households and first time home buyers across America by directing financial resources into the nation's housing programs.

The Ginnie Mae home loan program allows mortgage lenders to obtain a better price for their mortgage loans in the secondary loan market. The home loan lenders can then use the proceeds to make new mortgage loans available to you at a lower cost.  So you can feel secure about Ginnie Mae, they not buy or sell loans or issue mortgage-backed securities and therefore their balance sheet doesn't use derivatives to hedge or carry long term debt. 

Ginnie Mae guarantees investors the timely payment of principal and interest on MBS backed by federally insured or guaranteed loans that are insured by FHA.  Be sure to check with Ginnie Mae to see what they can offer you as a first time home buyer.

HUD/FHA  has a relevant acronym referred to as “OWNER” that will also help you as a first time home buyer.

O: Organize.  Organize your monthly resources dedicated to the home loan payment.

W: Watch Spending and Savings.  Prioritize monthly spending needs.

N: Negotiate. Always communicate with your bank to prevent problems.

E: Elevate Your Credit Score.  Know your current credit score and make payments on tome.

R: Read the Fine print.  Always be informed before you sign the paperwork associated with your home loan and real estate title company. 

Avoid Predatory Lenders

First time home buyers need to be alert to the fact that there are predatory lenders that will exploit your unfamiliarity with the home buying process. 

These types of abusive practices are present in the current mortgage lending market.  These illicit lenders can remove home equity from borrowers and weaken family finances with foreclosure threats.  Every month, misinformed home buyers, often first time home buyers or senior citizens become victims of this type of loan fraud. 

Predatory lenders sell homes for more than they are worth using fake appraisals.  Lenders tell buyers to lie about their income on loan applications.  Predatory lenders also charge fees for services that cannot be found or documented.  Lastly, they may use high pressure sales tactics to influence your decision.

Here are some tips on avoiding predatory lenders:

Attend a FHA/HUD sponsored home ownership course.

Always check references for your real estate agent.

Check the price of recently sold homes in the area of interest.

Hire a licensed home inspector after reference checks.

Compare costs and compare lending institution services.

Do not provide poor information on your loan application (i.e. income).

Do not borrow more money than you can afford with your current job.

Sign only completed documents that are valid and accurate.

Read all lines on the application forms.

For first time home buyers, making the decision to purchase your home may seem imposing. Spend the time to learn how you can benefit from the FHA insured loans. Shop around for mortgages at different lending insitutions. The more research you do, the more confident you will be when buying your first home.

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The official U.S. Government FHA Web site is HUD.gov