First Time Home Buyers

What are some tips for First Time Home Buyers?

Buying a home for the first time can be a trying task. There are a lot of factors that you as a potential home owner need to take into consideration. Let On Q help make the process easier for you! We know you have a lot of questions, so let us help you answer some of them!

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If you worried about making a down payment, research Down Payment Assistance Programs.

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Double-check your credit reports to make sure there are no discrepancies.

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Calculate a budget for your home.

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Calculate a budget for your home.

What are the benefits of Renting vs Buying a home?

Renting Vs. buying a home is a big decision that a lot of potential first time home buyers are facing. When deciding whether or not to rent or buy a new home check out these advantages and disadvantages to help you see what is the best option for you!

Advantages of Renting

No Responsibility for Maintenance or Repairs

As a renter, you are not responsible for home maintenance or repair costs. If a toilet backs up, a pipe bursts, or an appliance stops working, you don’t have to call an expensive repair person – all you need to do is call your landlord or superintendent.

Relocating Is Easier

When you rent, relocating for work is easier, less time-consuming, and potentially less costly. Though a sudden move may require you to break your rental lease, you can partially or fully offset the cost of doing so by subletting your apartment or negotiating with your landlord.

When it comes to selling a home, the process takes time and effort. If you are in the position to sell your home quickly, you may be forced to accept a low offer and take a loss on your investment.

No Exposure to Real Estate Market

Home values fluctuate in response to changing economic conditions. Because of this, home values can decline over time. You do not need to worry about that if you are a renter – your landlord does.

Less Strict Credit Requirements

Your application for a rental property is either approved or denied based on your credit score and credit history. As long as you don’t have an inconsistent credit report, you’re likely to find a landlord willing to rent to you.

For most homebuyers, even small changes to your credit score can significantly affect your mortgage rates, potentially adding thousands of dollars in interest over your loan term.

Some Utilities May Be Included

Many building owners cover the cost of most or all utilities. With home buyers, you will have to pay full utility costs depending on the property size and usage.

Disadvantages of Renting

Cannot Build Equity

In most renting agreements, every dollar you pay in rent is gone forever. No matter how long you remain in your rental unit or how great of a tenant you are, you cannot build equity in the property under a standard lease agreement.

If you are planning on staying in the same area for more than a few years, it might be a better financial choice to buy rather than rent.

No Federal Tax Benefits

Homeowners may have the ability to deduct property taxes and mortgage interest on their federal income tax returns. Renters aren’t eligible for any housing-related federal tax credits or deductions. Depending on your property tax and mortgage interest, this limitation can raise your federal tax liability by several hundred dollars per year.

Limited Control Over Ongoing Housing Costs

Rental property owners have the ability to raise rents to match rent for other properties in the market. As a renter, you cannot have complete control over your rent. Some homeowners with fixed-rate mortgages make fixed loan payments each month, regardless of what the local real estate market does.

Limited Housing Security

While most properties have great renter protection laws that prohibit landlords from evicting without cause, no law entitles you to remain in your rental unit indefinitely. Homeowners don’t face such uncertainty. They can stay in their homes as long as they are up to date on their mortgage payments.

What Are My Options for Down Payment Assistance as a First Time Home Buyer?

Down Payment Assistance, can be a game-changer for first-time homebuyers. Many potential home owners stop considering buying because they believe they don’t have enough saved for a down payment. These programs may be able to help any first-time homebuyer buy the home of their dreams.

There are lots of DPA mortgage options out there. With different combinations for pros and cons for each program, you need to do your research on different options. The best thing a first time homebuyer can do is to research state and local assistance programs.

To learn more about Down Payment assistance, visit our DPA page or talk to an On Q Mortgage Consultant for more information. 

How much should I put down as a First Time Home Buyer?

A down payment is a percentage of the purchase price the borrower needs to pay in cash; the rest of the amount is financed.

The amount of money you put down on a home affects your mortgage payment. The more money you bring to the table means you’ll be financing less and have a lower monthly payment

A general rule of thumb for a down payment on a home with no mortgage insurance payment is 20%. That being said, a first time home buyer may have fewer savings or might have a collection of student loans or other roadblocks holding them from saving that much.

No need to worry, there are multiple options for home buyers that cannot commit to making a 20% down payment!

What programs are available for First Time Home Buyers?

If you are wanting to purchase a home but struggling to come up with a down payment, check out these popular loan options:

FHA Loans

Loans that are insured by the Federal Housing Administration usually need a down payment as low as 3.5%.

To learn more about FHA loans and to see if this is the right loan for you, contact an On Q Mortgage Consultant for more information. 

VA Home Loans

These loans protected by the Department of Veterans Affairs (VA) generally carry a lower interest rate compared to other loans. VA Loans also require little to no down payment at all.

Contact an On Q Mortgage Consultant for more information about your options and eligibility for a VA Loan.

USDA Home Loans

Loans that are associated with the United States Department of Agriculture (USDA) offer low-interest mortgages to low-income individuals who want live in approved USDA approved rural areas.

Want to know more information about USDA loans? Contact an On Q Mortgage Consultant to see if this is the right loan for you!

Conventional Mortgages

Conventional mortgages follow the standards set by the government-sponsored entities Fannie Mae and Freddie Mac. These loans usually require as little as 3% down.

Want to understand more about the conventional loan process and see if it is for you? Contact an On Q Mortgage Consultant to see if this is the right loan for you!

How Much Should My Mortgage Payment Be?

Homebuyers that want the smallest payment possible usually opt for a 30-year fixed mortgage. If you can afford larger monthly payment, look into a 20 or 15-year fixed loan. These loans can help you get a lower interest rate as well! Some New Home Buyers prefer an adjustable-rate mortgage. These types of mortgages are riskier, but it guarantees a low-interest rate for the first few years of your mortgage.*

Want to know what monthly payment best fits your budget? Use our Mortgage Calculator to determine whether a 15-year or 30-year fixed mortgage is a better fit for you.

What are some common First Time Home Buyer mistakes?

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Not looking into Down Payment Assistance Programs.

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Ignoring VA, USDA, and FHA loan programs, thinking they do not apply to you.

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Only getting one mortgage rate quote.

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Not checking your credit and correcting any discrepancies.

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Not figuring out how much “home” you can afford.

Contact an experienced mortgage professional to start your loan

Loan Scenario

*Approximate loan amounts for a fixed 30 yr Conventional loan on a purchase price of $200,000 with 3% down are shown for comparison and informational purposes only.  Interest rate of 4.5%, APR of 4.659%, and down payment of $6,000. Additional estimated funds due at closing $6,912. Approximate monthly payment of $1540.  Loan scenario does not include additional costs/fees associated with monthly mortgage expenses such as HOA fee.  All amounts shown are estimates and will vary for each loan.  Rates and fees are subject to change at any time.  This is not a commitment to lend or extend credit.  Loan approval is subject to applicant’s qualification for a loan program.

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