First Time Home Buyer Loans – Pros and Cons

Are first time mortgage loans a good option?

It depends on who’s asking.

And for good reason. First time home buyer loans don’t necessarily cater to people who are making their first home purchase. You can also be qualified for this kind of loan for example, if within the last 3 years, you have yet to find a home. Also, it’s not always the case for people trying to look for a good discount or cheaper mortgage rate.

Normally, and for almost anything in this world, there are certain advantages and disadvantages. Such is the case with first time home buyers loans.  Shop around, get a second opinion from other loan firms.

PROS

1. Gives financial assistance to qualified borrowers. - especially if you have never owned a home your entire life, then this could just be the loan you are looking for. The requirements are generally few and one of the ways they can help you is they allow for very low (or sometimes, no) down payment.

2. Subsidized interest costs. – first time home buyer loans usually pay a part of the interest involved. Some even pay for all of it.

3. Suited for people with low and moderate income levels. – these types of loans are in your favor if you fall into this certain income bracket. However, if your earnings are way sky high already, the chances are you won’t qualify for this program and are better off with other types of housing loans.

CONS

1. Price limit on your property. – first time home buyer loans do have some distinct benefits, but most often if you get into one of these, you will not be entitled to buy the more expensive houses in your area. Most likely, you’d be limited to low cost houses, simply because the idea is these loans are to benefit the people with the most need.

2. Possible losses and tax disadvantages. – if you get into a first time home buyer loan program, and you decide to sell your house earlier than expected, be prepared to lose some of the benefits due you. Also, for these benefits you often have to pay a certain “recapture tax”.

3. Short lists … Shared increases. - along with the other disadvantages, you also may be limited to a short list when it comes to loan types (e.g. limited to 30 year fixed rate mortgages). And then there’s the possibility of sharing increased home values as well.

It depends on who’s asking.

And for good reason. First time home buyer loans don’t necessarily cater to people who are making their first home purchase. You can also be qualified for this kind of loan for example, if within the last 3 years, you have yet to find a home. Also, it’s not always the case for people trying to look for a good discount or cheaper mortgage rate.

Normally, and for almost anything in this world, there are certain advantages and disadvantages. Such is the case with first time home buyers loans.

PROS

1. Gives financial assistance to qualified borrowers. - especially if you have never owned a home your entire life, then this could just be the loan you are looking for. The requirements are generally few and one of the ways they can help you is they allow for very low (or sometimes, no) down payment.

2. Subsidized interest costs. – first time home buyer loans usually pay a part of the interest involved. Some even pay for all of it.

3. Suited for people with low and moderate income levels. – these types of loans are in your favor if you fall into this certain income bracket. However, if your earnings are way sky high already, the chances are you won’t qualify for this program and are better off with other types of housing loans.

CONS

1. Price limit on your property. – first time home buyer loans do have some distinct benefits, but most often if you get into one of these, you will not be entitled to buy the more expensive houses in your area. Most likely, you’d be limited to low cost houses, simply because the idea is these loans are to benefit the people with the most need.

2. Possible losses and tax disadvantages. – if you get into a first time home buyer loan program, and you decide to sell your house earlier than expected, be prepared to lose some of the benefits due you. Also, for these benefits you often have to pay a certain “recapture tax”.

3. Short lists … Shared increases. - along with the other disadvantages, you also may be limited to a short list when it comes to loan types (e.g. limited to 30 year fixed rate mortgages). And then there’s the possibility of sharing increased home values as well.