Finding Deals for First Time Home Buyers

First time home buyers have a lot on their plates, especially in this day and age of tight mortgage lending. Given the fact that a stagnant economy is making it even tougher to save money for a down payment and closing costs, and the fact that banks are less willing to lend than they were 10 or 15 years ago, it becomes easy to see why first time home buyers are having more trouble than ever getting into a house of their own.

Good News for New Home Buyers

But there is good news. There are deals to help first-time home buyers get off the ground. Everything from low-cost mortgages to down payment assistance programs to outright housing grants. You just need to know where to look.

1. Your Mortgage Lender

The first place to begin searching for deals for first time home buyers is with a mortgage lender. By "mortgage lender" we are not referring to a bank. The loan officer at the bank represents only that institution and has no incentive to find you the best deal available. Besides, banks are among the toughest institutions these days to secure a first mortgage from. Rather, you should use a local mortgage broker who has access to dozens of different lenders and state programs. These mortgage brokers are experts at what they do - and if anyone can find you a deal, it is one of them.

Furthermore, a mortgage broker only gets paid after you sign your contract. He works on commission, so his first priority is to make sure you are approved for something. If he looks at one program which will not be sufficient for you, rest assured he probably has something else in his portfolio he can make work. The point is, he wants you to have a mortgage or else he's wasted his time and will not get paid.

By the same token, be aware that some mortgage brokers are careless in how they treat their customers because all they're interested in is their commission. It's still up to you to know what it is your signing and what the deal offers you. You might want to check with friends or relatives for their recommendations regarding reliable mortgage brokers.

2. Contact Your State

When banks were seriously competing for mortgages some 20 years or so ago, it was quite common for them to offer their own mortgage deals to try to earn customers. But with the tight financial circumstances the country now finds itself in, most of that competition has evaporated. Therefore, low interest loans, down payment assistance programs, and grants will most likely come from state resources. Contact your state housing authority, or whatever division of state government handles housing, and ask about the programs they currently offer. We also have a wealth of information regarding specific states on this website to help you.

By visiting our 1st time home buyer program section you will find a lot of information about available assistance at the federal, state and local level. You will also be able to find detailed information regarding assistance programs specific to a state you are interested in moving to. Spending some time researching these programs and whether they are viable for you is time well spent.

If you find a program suitable for you, you most likely will not be able to apply until you have a signed purchase offer. Therefore, it's imperative to get busy working with a real estate agent as early in the process as possible. Let him or her know that you plan to use a specific state program so that he or she can put you in contact with a mortgage lender who has access to that program. With a good mortgage lender on your side you could probably even get a pre-qualification letter that will make shopping for a house much easier.

3. Local Home Listings

If you're a first-time home buyer who has been following your local listings for weeks or months, you may have reached the point where they are rather dry and no longer exciting to look at. The temptation here is to stop looking and leave that to your real estate agent. This could be a mistake in that many large and mid-sized cities run special housing programs at various times throughout the year. When they do so, details of these programs are usually published with the local listings.

In a perfect world your real estate agent should be aware of these programs and alert you as soon as they become available. But an agent who is overworked or not paying attention may miss a new program and fail to make you aware of it. Ultimately, you are your best advocate in searching for local programs for first time home buyers.

Things You Can Do

If you're new to the home buying process, or you've been turned down and now expect to have to wait a couple years, there are some proactive things you can do that will increase your chances of getting a special deal. First and foremost is to do everything in your power to keep your credit score as high as possible.

Since a typical mortgage is a multi-year commitment, lenders are hesitant to write a loan for anyone who has a poor credit score. You will need a score of at least 550 to even be considered in today's market. If you can keep your score in the mid-to high 70s you'll be golden. You do so by paying all of your bills on time and in full.

You should also work hard to maintain steady and consistent employment. That's harder said than done in today's job market, but the longer you can remain with the same employer the more likely it is that you'll be able to get the best mortgage deal. Lenders like to see stability, so give it to them by staying with your job as long as you can.

Finally, don't be afraid to negotiate when it comes time to apply for your mortgage and write a purchase offer on a home. If there's one rule in the real estate industry, it's the fact that nothing is set in stone until paperwork has been signed. Previous to your signature everything is negotiable. If you're not a strong negotiator take a friend or family member who is. With a little haggling back and forth, there's no telling what you can achieve. You want to save money, and negotiating where possible is the perfect opportunity to do so.