We're going to start a series for first time homebuyers. There are quite a few steps that you need to move through as you are considering buying a home. So the steps that you are going to consider are, are you ready to buy a home, the financing part of it, looking for a home and then of course the closing. In this series we're gonna go through the process so that you understand what exactly it takes to become a homeowner, and if it is the right option for you. Because sometimes owning a home can be more expensive than renting. Of Course this depends on your financial situation or what you're looking for in a home.
So, the tip of the day today is going to be about first time homebuyers. What exactly is a first time homebuyer? Well, it is defined in a couple of different ways. But also important is, why is it good to be a first time homebuyer? As a first time homebuyer, you can take advantages of a lot of programs that are state, local and federal that can help you get your first home as a first time homebuyer. It is a little bit overwhelming because there's so many options out there. But if you find some resources or reach out to people, they're always willing to help you in the process. You can also do some research on your own because it is definitely a daunting task, and it can be overwhelming and scary at times. You will want all the information you can to help ease the stress. So according to the US Department of Housing and urban development or known as HUD, there are some certain criteria that you must meet to be recognized as a first time homebuyer, but some of them might surprise you. It doesn't mean that you haven't ever owned a home. So, according to HUD, if you have never owned a home, obviously, you're a first time homebuyer, but if you haven't owned your own home in the past three years. You can qualify as a first time homebuyer. Another criteria is, if you've owned a home with a spouse but you have never purchased a home. Then you and your spouse, are eligible to purchase a home as first time homebuyers. Also, a single parent who has only ever owned a home with a spouse can also qualify as a first time homebuyer. A displaced homemaker, who has only ever owned a home with a spouse, qualifies as a first time homebuyer. Some other criteria that can be confusing like when a homeowner whose only owned a home that hasn't been permanently affixed to foundation. These ones are kind of crazy so you can always ask a mortgage lender if you qualify for these types of programs.
So, the advantages of being a first time homebuyer is that you don't have to have the traditional 20% down on a home that most conventional loans need. If you're buying a home for easy numbers, $100,000, then you're looking at 20% of that which is going to be $20,000. This is a very intimidating number and most people just automatically think they will never be a homeowner because they can't save that kind of money. But as a first time homebuyer, you could qualify for a much less downpayment than the traditional 20%, sometimes as low as 0% down. But I always advise that you would put something down that way you have some equity already built into your home. So, 5% is a good percentage to start at. So 5% down of $100,000, you're looking at $5,000 down, which is better and easier to save than $20,000.
You will need to talk with a lender to see if you can qualify for all these first time homebuyer programs and that way, you can take advantage of all of these incentives that HUD has put out there, which make it easier for first time homebuyer to buy a home.
Some other advantages of being a first time homebuyer are that some programs help you with closing costs and down payment fees. So those are awesome programs to look into. If you're a first time homebuyer you also get some benefits from taxes. So there are lots of advantages to owning a home, but if you do go the first time home buyer route and perhaps you don't have the greatest of credit scores. Well, there might be some cons to having one of these first time homebuyer programs. This could be mortgage insurance. This is just another cushion for the bank to loan you money, so that they have insurance that you're going to pay because your credit isn't great. you can get more details about these kinds of programs through your mortgage lender. If you don't have a mortgage lender, you can always contact me through my social pages or email with any of those questions and I'd be more than happy to give you a recommendation for our mortgage lender. If you enjoyed these tips, please like and subscribe to my blog and YouTube channel. If you have any questions about being a first time homebuyer or the process, please don't hesitate to contact me through me and until next week, have a wonderful rest of the week.