Many first-time home buyers are on the look out for any kind of help they can get from the government to help ease the financial burden of buying a house. If you’re thinking of buying Phoenix real estate, you may be thinking of how you can afford the prices of the Phoenix homes for sale that you’re looking at. Even though some people may be disappointed to know that the first-time home buyer’s tax credit has ended last April, there are still some government-funded sources that you can check out for help in affording your first home purchase. Here are a few examples to start you off:
1. FHA Insured Loans – Take note that this is insurance for a loan, not a loan in itself. You buy the insurance for the loan and the government assures the lender that it will repay the lender in case you default on your payment in the future. For you to be able to qualify for this, your FICO score should be 580 and above, and the downpayment could be as low as 3.5%. This means that if you’re looking at Phoenix homes for sale and you want to purchase Phoenix real estate worth $400,000, the downpayment should be $14,000. There are several positive points to this loan insurance.
The first one is that you can use nontraditional credit score sources such as your payment track record for rent, utilities, and other bills. This could be an ideal setup for people who are just starting out in life or those who didn’t really focus on improving their credit score before they decided to buy a house. The points or fees for the title insurance, escrow, and the likes are also limited, unlike with traditional insurances where this could be higher. With the FHA insuring your loan, you can also get the funds for the loan from non-traditional sources, such as gifts or borrowed money from family and friends.
When you avail the FHA Insured Loans, you have to keep in mind that the government can be a little strict about the kind of property you buy. It has to be in a good enough condition that you would do very minimal work on the house before you move in. Fixer-uppers are definitely out of the question.
2. State and City-funded loans – Cities, states and even counties sometimes have government-funded grants that aim to help first-time home buyers purchase their home. They are often geared towards low to moderate-income families for properties within a certain price bracket. The drawback for these kinds of loan is that their funds are limited and unless you snap one up as soon as it’s made available, it’s not going to last very long. When the funds run out, they can’t accommodate new loan applications anymore.
3. FHA 203k Loan – This loan isn’t strictly to help you afford a new house, but it could help you with funding the repairs and basic remodelling that you will do on your house. This fund is meant to help new home owners fund the basic repairs for their house before they move in. This means plumbing, electrical issues, roof, and the like. You pay the monthly repayments for both bonds and loans for repairs. The disadvantage is that you must wait for the repairs completed before you can move can be of great help to those who more than a part-buy because Fixer Go to recovery can save money go in advance to reduce the interest payable every month.