Native American First Time Home Buyer Guide

While setting aside an amount for rental payments every month, one does tend to low-key wish for owning a house. However, given the numerous financial responsibilities, the chances of this dream coming true seem rather trivial.

What most people do not realize is that their landlords are very smartly paying mortgage on property via the rent they receive from tenants. Thus, they are financing their installments without any major blow to the monthly budget. Not only this, but the landlords also enjoy deduction in yearly taxes concerning real estate tax and mortgage interest payments.

native American first time home buyersSource: point2homes.com

What a native American first-time homebuyer is usually unaware of is that s/he might be able to avail mortgage opportunities within his/her budget. Many financing options are available for the purpose, not just on the national, but also on the regional and local levels. All one needs to do is carry out detailed research regarding each one and then decide which to avail.

native American first time home buyerssSource: zillow.com

Since a first-timer may be clueless regarding the starting point, we decided to come up with some suggestions that will help these individuals in selecting a suitable mortgage program and prepare in advance for the common hurdles experienced by laymen who are unfamiliar with the process.

  1. The first step should be assessing where one stands in terms of affordability. Therefore, the individual should list down all sources of income along with the expenses and debt payments to get a realistic summary.
  2. Next, they should get themselves a reliable and detailed First Time Home Buyer Guide. These guides are available online and can also be accessed via mortgage lenders, local bodies, or government organizations that provide home financing options.
  3. Research about federal and regional programs that provide grants to individuals who are struggling to buy their first home must be carried out. Although the monetary value of these grants may vary with each program and each case, even if one can get their hands on a small amount, it can be a significant addition to the deposit. On the other hand, if one gets lucky and is allocated a large grant, they might be able to relocate to a better area, or even gather enough money to fund the purchase of a small home.
  4. Once the individual has gathered enough resources via savings, grant, or loan, it is recommended that they make themselves familiar with the jargon of both; mortgage as well as real estate industry. Many first-time homebuyers suffer because they do not completely understand certain terms in their agreement. Others are apprehensive of pursuing a deal because they are unclear about what it entails.
  5. Moreover, one must be aware of how “first-time buyer loans” work. Therefore, interested individuals must educate themselves by studying the details on the internet. They must also understand how these loans, in certain cases, may differ from mortgage loans.
  6. Not many natives, American first-time homebuyers are aware of the fact that they can end up paying a lower interest on their loan if they “lock” the rate in advance. The reason why “locking” is advised is that interest rates keep varying and may increase between the time when the buyer first makes the loan request and the time when his/her loan is processed. There is an option of pre-deciding the interest rate at the time of making one’s application. The “locked” rate remains valid for 30-60 days. If within this period, the applicant decides to pursue this loan, s/he would be liable to pay the agreed interest rate, irrespective of the fact whether it has increased or decreased.
  7. Remember when our school teachers said that if your basic concepts are clear, you can easily grasp the more complicated ones. It turns out that this rule was not just limited to academics. Therefore, it is advised that first-time homebuyers should make themselves completely familiar with all the clauses of a regular mortgage loan. The standard mortgage application also referred to as 1003, maybe a valuable source of information concerning most categories of mortgage loans. If you are wondering how to get your hands on 1003, you would be pleased to know that it can easily be downloaded from the internet. A blank copy can also be obtained from any nearby bank. If one is aware of the fundamental elements of a mortgage loan, any slight variations in the “first time home buyer” loan program of their choice, would most probably not be an issue to comprehend.
  8. Due to the involvement of high risk and increased incidents of default, most lenders have stopped issuing subprime loans. If someone’s imperfect credit score is acting as a barrier to qualify for first-time home buying loans, they must read up on Federal Housing Administration (FHA) Loans. These loans are an initiative by the government to aid those who have a low credit rating so that they can fulfill their dream of owning a house. FHA Loans lend to such individuals at low interest and low mortgage insurance rates.Another government program that may help with the purchase of a house is the Veterans Administration (VA) Loan that caters to Veterans and Servicemembers.Although both these programs may have their eligibility criteria and additional application requirements, a “first-time homebuyer” must be aware of these and multiple other benefits available at the federal and state level. In short, research should be up to the mark to ensure that one does not miss out on any available benefit or grant, or ends up paying more than required.
  9. An important factor that must be considered while making a purchase decision is “closing costs”. Most people simply ignore this expense and only consider the interest rates when choosing their first home. This approach is unrealistic and being unprepared for paying the closing costs would cause them to end up in trouble.For those who are wondering, what a closing cost is, it is a collective term used for charges that buyers and sellers might have to incur during the transaction, besides the agreed-upon price of the property. Examples include deed recording fees, title insurance, and credit report charges.A smart decision-maker would always compare the total expenses that they are expected to incur (including the closing cost) before choosing which deal to close.
  10. It is rightly said that good things do not last a lifetime. Therefore, if a native American first-time home buyer finds a mortgage loan that ticks all boxes, s/he should not waste time and quickly avail the opportunity. Reason being that the market is uncertain and rates are subject to change. In rare cases, there might be a dip in interest rates but the risk of a surge, change in eligibility criteria and the very dissolution of the program itself might eliminate one’s chances of owning one dream home. Thus, the negative aspects of unnecessary wait are far greater than the positive ones.

Most Americans get unnecessarily intimidated at the thought of buying their first home. They think that it is a complicated process that would lead them to a lifetime of debt payments. However, the reality is that many sources of aid are available for first-time buyers by the government as well as mortgage lenders. Examples are VA Loans and FHA Loans mentioned above. If interested, you can always find out about the grants and lending programs available to residents of your state. Furthermore, there is a plethora of useful information on the internet that could help you find a mortgage loan in your budget.

buying their first homeSource: squareyards.com

To conclude, if you follow the above-mentioned steps and make efforts to do thorough research, you will be able to close a deal successfully.

Leave a Comment