First Time Home Buyer Tips

by James Sullivan
(Mendenhall, MS)

Regarding first time home buyer tips: My wife and I are trying to purchase our first home. It was her parents' home and was offered to us at a great price. It was appraised at $140k six years ago and offered to us at $46k.

I have good enough credit to qualify for a USDA rural guaranteed loan with a 30 yr fixed rate, but hers is bad due to divorce issues. I would like to finance $66K to add a carport and bedroom to accommodate our growing family.

I have a lot of questions and could use some first time home buyer tips.

1. Would the USDA loan be best for us?
2. Is it best to have an escrow account?
3. What type of interest rates do these loans typically carry?
4. A gift of equity was mentioned to me but how would it apply?

Why didn't they teach this stuff in school?

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Dear James,

I don't have to convince you that you've landed in the right spot! I started my two websites just because this stuff is not taught in school. So let's get straight to the point with information.

1. Would the USDA loan be best for us?
   
   The minimal amount of cash needed to get a USDA mortgage is very attractive to first time home buyers although the property and income eligibility guidelines can be a deterent.
   
   You can visit the USDA Income and Property Eligibility site for more information.
   
   Moreover when it comes to choosing any mortgage program, credit is of the utmost importance. By all means, help your wife restore her credit. Start today at 10 Basic Steps To Fixing Bad Credit


2. Is it best to have an escrow account?
   
   Escrow accounts, also called impound accounts, include property tax and insurance in the monthly house payments. For a quick overview, go to Impound Accounts And Recurring Mortgage Closing Costs and scroll part way down the page to helpful information.


3. What type of interest rates do these loans typically carry?
   
   Ask this question again when you talk with the USDA counselors but I believe, fixed rates.
   
   I have provided links to uncommon information about fixed rate mortgages below for your convenience. By all means, please let me know if you have more questions.


4. A gift of equity was mentioned to me but how would it apply?
   
   My experience with gifts of equity has run with FHA mortgage loans and involved a relative selling a home to a family member for well under the market value. The difference between the sales price and the appraised value became the gift of equity applied to the transaction as a down payment. (FHA guidelines change from time to time so check with your lender representative to verify if this is a current option.)
   
   Find out more about the powerful advantages to FHA home loans here. You will love all of the information!

James, take a moment to bookmark First Time Home Buyer Tips to your favorites and visit often for more mortgage tips. You can also invite friends to comment on this page or ask another question of their own like you did.

Visit How To Buy A House for solutions based on inquiries from other Contributors just like you.

Best Wishes,

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