In my recent post “Are You Ready?”, I explained a few important steps for a first-time home buyer. If you think you are ready to buy a home; but are still unsure about your financial situation then continue reading. Many first-time home buyers have a difficult time with the intial investment. A typical down payment of 20% is just not feasible for some people. The most recent median sales price was $178,000. Even at that low price, the initial downpayment could be as much as $35,600 not including closing costs. If saving that much in the next year seems impossible, here are a few things you might want to consider before ruling out home ownership in 2009.
First things first, there is a new first-time home buyer tax credit available for those making under $75,000/year. This credit of $7500 works like an interest free loan and must be paid back within 15 years. It’s not free; but it certainly will help in your first year. The catch is that you have to close before July 1st of 2009 in order to take advantage of this particular credit.
An FHA loan is another great resource for first-time home buyers who may need some assistance in order to close on a home. With an FHA loan, the government insures the loan and therefore you can have a low downpayment and even have most of your closing costs included in the loan.
If you use an FHA loan you are also eligible for a gift program called Nehemiah Program. This program offers up 6% of the final contract sales price towards your downpayment and/or closing costs. The really great part is that it is a gift and does not need to be paid back.
Even some sellers are willing to offer assitance in today’s market. Sellers usually are only able to contribute 3-3.5% of the sales price towards closing costs per loan restrictions. It never hurts to include this in an offer, because everything is negotiable!