Do I Qualify for First-Time Homebuyer Programs and Home Loans?

Popular Home Loans for First-Time Buyers

There are several home loan options out there for first-time homebuyers in the areas of St. Louis, Missouri and Overland Park, Kansas. It’s important to do your research so that you are able to pick the option that is best for you and your finances. Three popular choices for first-time homebuyers are Fixed-Rate Mortgages (FRM), Adjustable Rate Mortgages (ARM), and Federal Housing Administration Mortgages (FHA). 

Fixed-Rate Mortgages
Many first time homebuyers choose to use a Fixed-Rate Mortgage because the home loan interest rate remains the same for the full term of the loan. Typically a FRM loan is for 30 years, but it does vary. First-time homeowners like FRMs because the monthly payment never changes, unless there is a change in taxes or insurance rates on your home. Knowing the rate will remain the same is helpful when trying to plan and budget for your first home purchase. With a Fixed-Rate Mortgage, the principal and interest rates stay the same as well. Once you secure your loan, you will receive a schedule that outlines the rate and number of payments you’re required to make and when you need to make them.

Adjustable Rate Mortgages
An Adjustable Rate Mortgage is a loan with interest rates and monthly payments that fluctuate. With ARMs the interest rate and monthly payments can go up, or down. This can occur as often as once or twice a year since the adjustment is tied to a financial index, like the U.S. Treasury Securities index or the Libor or Treasury bill yield. Why do first-time homebuyers like ARMs if the rates aren’t steady? ARM loans can allow many first-time homebuyers to finance a more expensive home because the initial interest rate is lower. Though the interest rate can fluctuate over the years, “the mortgage ties the interest rate to a margin that includes a stated index, and a spread. The index can change, but the spread always remains the same.”

Federal Housing Administration Mortgages
A Federal Housing Administration Mortgage is a loan program insured by the Federal Housing Administration. FHA loans are great for buyers with low credit scores who don’t have much money saved for a down payment. This is because FHA loans typically require smaller down payments and lower credit scores than most conventional loans. A first time home buyer can get an FHA loan with a credit score as low as 580 with 3.5% down, or have a credit score ranging between 500 and 579 and put at least 10% down.

Tips for Getting Financing for a Home Loan

Before you apply for a mortgage make sure your credit score is ready and in the right range, your income is stable, and that you’ve saved enough money to cover the down payment. When you come to Homestead Financial Mortgage be sure to arrive prepared with all of the necessary paperwork. You will need:

• • The social security numbers of anyone whose name will be on the loan
  • Copies of your bank statements from your checking and savings accounts for the past six months
  • Evidence of financial assets like stocks or bonds
  • Recent pay stubs that show your earnings
  • A list of all your credit card accounts, with the monthly amounts owed on each
  • The account numbers for car loans, or any other loans you may have, along with the remaining balance
  • Your income tax statements from the last two years
  • The name and address of a person who can verify your employment
    

The Best Mortgage Interest Rates Available Now

What are today’s mortgage rates? According to Bankrate’s latest survey of the nation’s largest mortgage lenders, the benchmark interest rates and APR are as follows:

Current Mortgage and Refinance Rates as of September 1, 2020 at 6:30am
At Homestead Financial Mortgage we currently offer 30 year FHA loans at a 2.5% interest rate and 3.127% APR, and 30 year Conventional Loans at a 2.625% interest rate and 2.879% APR. 

First-Time Homebuyer Programs from Homestead Financial

At Homestead Financial Mortgage we offer several types of loans that are great for a first-time homebuyer: Federal Housing Administration (FHA) Loans, Conventional Loans, The United States Department of Agriculture Loans (USDA), and Veterans Administration Loans (VA). 

Federal Housing Administration Loans (FHA)
Federal Housing Administration Loans are insured by the Federal Housing Administration and protect lenders from financial risk. FHA Loans are extremely appealing to borrowers because they only require down payment of 3.5% and you can be accepted even if you have some debt. FHA loans are a great option for first-time homebuyers because you don’t need to have excellent credit or a high income. The only catch to FHA loans is that it must be used for your primary residence. An FHA loan cannot be used for an investment property, vacation house, or second home.

Conventional Loans
A mortgage that is not protected or guaranteed by a government agency is known as a conventional loan. Conventional loans, also called non-government loans, are highly sought after because of the appealing rates. For that reason, many first-time homebuyers take advantage of this type of loan. Conventional loan mortgages can have either a fixed or adjustable rate, and usually require a downpayment of 20% or more. Over 60% of all mortgages in the United States are conventional. Conventional loan programs fall into three categories:

• • • Conforming Loans – meets guidelines and loan size limits for the area
    • Jumbo Loans – exceeds loan size limits for the area
    • Non-Conforming Loans – does not meet conforming guidelines 

The United States Department of Agriculture Loans (USDA)
A USDA loan is guaranteed by the government, and only available in rural locations. USDA loans exist to help build healthy and sustainable rural communities by providing borrowers with USDA backed mortgages. These home loans are zero-down and low interest, which helps low to moderate-income citizens find safe and affordable housing.

Veterans Administration Loans (VA)
Whether you’re buying your first home or need to refinance, veterans can save money with affordable VA loans. VA Home Loans are backed by the Veterans Affairs Department, and are available to service members, veterans, and eligible surviving spouses. VA loans are typically low interest, and are available for no money down to qualified borrowers!

Take the first step towards purchasing your own home by filling out this simple form or by giving us a call at 1-636-271-4663 today!