First Time Homebuyers
Purchasing a home is a significant financial undertaking for anyone, especially for first-time home buyers who are making their first large purchase through credit. To avoid financial disasters such as bankruptcy or foreclosure, first-time home buyers should conduct thorough research on real estate prices, neighborhoods and financing options.
Many home buyers purchase homes through traditional mortgage loans from FHA-approved mortgage lenders. Such lenders require potential mortgagees to have particular credit scores or histories. The Home Buying Institute, an organization that offers resources and advice to home buyers, notes that the lowest mortgage rates are reserved for people with the best credit histories and who make relatively large down payments. Financial advice site Bank Rate recommends that potential homeowners look over their credit reports and correct any necessary errors. Paying down credit card balances is the next big priority to increase the credit score and potentially garner lower interest rates on a mortgage.
First-time home buyers should select a home that will suit their lifestyle for a few years. New American Funding, a financial resource for homeowners, recommends that first-time home buyers purchase a home that has room to accommodate a growing family, extended family or whatever foreseeable needs should arise in the near future.
The sale price offered by a home seller is often not the final price. After hiring a licensed professional to conduct a home inspection, use the findings of the report to negotiate a lower sale price. For example, if the home needs a new boiler, that could be a reason to authorize a lower counteroffer.
In addition to traditional mortgages from federally approved lenders, first-time home buyers may be eligible for other special loans and grants. See Links Below, or contact your local housing agency to find out about similar programs.
The United State Department of Housing and Urban Development notes that unlike rent payments, mortgage loan interest can be deducted from annual federal income taxes. Factor in this tax break when constructing a long-term budget for the home. Visit the Internal Revenue Service website to keep abreast of any special tax incentives, especially for first-time home buyers.
Some Helpful Links
Michigan Home Buying Programs
http://portal.hud.gov/hudportal/HUD?src=/states/michigan
Common Questions from First-time Homebuyers
http://portal.hud.gov/hudportal/HUD?src=/topics/common_questions
Michigan Down Payment Assistance (MSHDA)
http://www.michigan.gov/mshda/0,1607,7-141-45866_45870-175332–,00.html