It was not long ago that in order to purchase a home you had to come up with a 20% downpayment. Today, there are many forms of low money down mortgage financing available such as VA loans, FHA mortgages, and USDA rural housing loans. As a first time home buyer, it is important that you gain a basic understanding of the pros and cons of these programs. ForTheBestRate.com is filled with information on various products and some of the the risks and benefits associated with them.
The Pros and Cons of Low Money Down Mortgage Financing for First Time Home Buyers:
- These programs allow people to purchase homes and invest in real estate who do not have large cash reserves.
- Homeowners enjoy potential tax advantages and have the ability to build equity by paying down the loans principal each month.
- Home buyers may possibly build equity simply by home prices increasing in their given markets.
- Money may be freed up to invest elsewhere or be used for other expenses.
- Allows people to pursue the dream of homeownership and helps strengthen communities.
- Mortgage rates are typically higher than with loans with larger downpayments.
- If property values fall in an area, homeowners may end up owing more than their homes are worth.
- PMI payments (private mortgage insurance) do not go toward paying down your principal.
- Payments may change if a home buyer selects an adjustable rate mortgage product – be sure to ask your mortgage banker if the rates are fixed and for how long.
- Balloon payments on some second mortgages may lead to a large lump sum being due at one time – make sure that you ask your mortgage banker if there are any balloon payments with your loans.
First Time Home Buyer Little Money Down Mortgage Solutions
ForTheBestRate.com has helped thousands of first time home buyers research their home financing needs and we offer information on some of the very best low money down home loans on the market. Check out information on the following low and no money down financing solutions available in today’s marketplace:
- USDA Rural Housing Loans – No money down options for buying property in eligible rural communities. Long term fixed rate programs.
- VA Financing – Zero down programs for eligible military veterans and active duty servicemen and women.
- FHA Mortgages – Very popular low money down financing solution. Credit requirements less conservative than other conventional financing options.