Michigan first-time home buyers who work with us often have the same question: Should we or shouldn’t we get a first-time home buyer loan?
In fact, there are a number of advantages and disadvantages attached to this type of loan.
So today, we thought we would take a few moments to share with you what you can expect from getting this type of loan as a first-time home buyer in the metro Detroit area. That way, when it comes time for your to decide how you’re going to finance your first home, you’ll have all of the information you need right at your fingertips.
First-Time Home Buyer Loans 101
A first time home buyer loan offers financial assistance to qualified buyers by utilizing a variety of methods:
- Very low down payments or none at all
- Subsidezed interest costs
- Forgive loans
- Defer payments
Generally speaking, the best candidates for this type of loan are home buyers who have never owned a home, although those who have not owned a home in more than three years may also qualify.
With these types of loans, certain restrictions may apply in order to qualify. Thus, it’s important to research beforehand whether you meet those restrictions.
First-time home buyers should also be aware of the specific restrictions attached to using the loan. These may or may not include:
- Being prohibited from buying homes in higher price ranges
- Being required to make the newly purchased home your primary residence
- Being prohibited from renting the home to others
These types of loans are certainly great for those buyers who otherwise might not be able to purchase the home. But there are some disadvantages to this type of loan.
Some of those drawbacks include:
- Buyers are limited to the type of home they want by price range
- Buyers may not be eligible for certain program benefits if they sell their home before a predetermined time limit.
- Buyers may have a limited number of loan types to choose from.
- Buyers may have to pay for recapture taxes in exchange for benefits they receive through the program
For these reasons and more, some first-time home buyers may find it just as beneficial to get a traditional loan, although this should be considered on a case by case basis.
We’ll Help You Through Your First Michigan Home Buying Experience
Contact The Knight Team today to learn even more valuable information that is sure to help you as a first-time home buyer. We are glad to offer you our expert assistance, which includes straight-forward advice and user-friendly resources.
Until next time!