Tips for the First Time NJ Home Buyer - How Loans Work

First time NJ home buyer loans allow buyers to get into a house more easily. However, just because you’re a first time home buyer doesn’t mean you should use a first time home buyer loan.

What is a First Time Home Buyer Loan? A person’s first home purchase is a big deal. It takes time, energy, and money. A good NJ Licensed Realtor will help make sure you spend your time and energy focused in the right places. To help with the money hurdle, many people use first time home buyer loans. These programs vary depending on where they’re offered, but the general idea is this: first time home buyer loans give financial assistance to qualified borrowers. Such loans are effective in various ways.

• Allow for a very low (or no) down payment
• Subsidize interest costs
• Offer grants
• Forgive loans
• Limit fees that lenders are allowed to charge
• Defer payments

Not that first time home buyer loans may offer any or none of the benefits listed above. You should research first time home buyer loans that are available in your area. A good place to start is the Weichert Gold Services Website.

Who Gets First Time Home Buyer Loans? As you might imagined, individuals who have never owned a home are good candidates. In addition, some programs offer first time home buyer loans to people who have not found a home within the last three years. Again, check to see what’s available to you.

You may have to meet certain income restrictions to qualify for a subsidized first time home buyer loan. In general, these programs try to limit benefits to just people with low to moderate income levels. If you earn too much, you won’t qualify for the program.

What Are First Time Home Buyer Loan Restrictions? Most programs offer a dollar limit on the property you’re buying. Let’s face it, most people buying a home for the first time are not in the market for the million dollar mansion on the Shrewsbury River. Instead you’re limited to properties on the lower end of the spectrum. In Monmouth and Ocean Counties, most benefits are available to homes below $400,000.

You also have to live in the home as your primary residence. IF you’re going to rent the place out, don’t use first time home buyers loans. Finally, the home you buy most likely has to meet some sort of physical requirements. It must be in good condition and free from any safety hazards such as lead based paint.

What Are First Time Home Buyer Loan Pitfalls? For some first time home buyers, these programs are perfect. They open the door to home ownership where a family would not have been able to buy a home otherwise. Communities also benefit from first time home buyer loans. Home owners who take care of the property contribute to the community. First time home buyer programs, however can be the wrong choice in some cases.

• Lower value home may not be the one you want
• You might lose some of the benefits if you sell your home too soon
• You may have to pay a tax for some of the benefits you have received
• You may be limited to a short list of loan types
• You may have to share increased home values with the program

Given these restrictions, some may do better when avoiding subsidized first time home buyer loans. Sometimes, people with good credit may discover a plain vanilla mortgage will work out better. With a FICO credit score above 720, you probably won’t see an advantage with subsidized first time home buyer loans. Once you get below 680, the subsidized program will start to look better. These days, you can get a traditional mortgage with very little down.

The best thing to do is explorer your options. Take a look at what a traditional mortage lender is offering. Then compare that to subsidized first time home buyer loans. Once you see the numbers up against each other, consider your costs over the life of your home ownership. Also, shop around. Talk to mortage bankers and brokers, banks, credit unions, and even your real estate agent. You never know where the best deal for you may be uncovered.

For more information about mortgage programs and how I can help uncover the best properties for the first time home buyer, give me a call at (732) 233-6969 or email at dkurland@weichert.com!