First Time HomeBuyers - Nevermind Your Credit

First Time HomeBuyers - Nevermind Your Credit
By: Trisha Dingillo

First Time Home Buyers are looking for the right home. Typically for a first home, buyers are looking for something affordable that can accommodate their needs at this time in their lives. Many starting out home buyers don't need anything extravagant, but opt for something that can get them off on the right foot and out of the rental rat race.

It's likely that this may even be only a temporary home for the next five years, until their credit improves, salary increases or they're more surefooted about their income, debt and budget. Payments for this home purchase now, are crucial to the financial future of a first timer. If this purchase ends in foreclosure, it will ruin the plan set forth to move up to a bigger, more lavish home when life brings changes such as a larger family.

Just as important as that right home with the right price, is the financing to actually purchase it, and what type of loan you choose. A shorter term fixed loan, actually called a 5 Year ARM (adjustable rate mortgage), may be the best choice for a first time home buyer because the interest rates are lower than conventional 30 year fixed rate loans. With lower credit scores this may be optimal.

On a 5 year arm, the loan payment is spread out over 30 years, and the interest rate is fixed for the first 5. After the first 5 years, the rate adjusts which means, your payments can fluctuate.

There's' caution you should take before choosing this type of loan. If you have ANY plans of staying in the home longer than 5 years, or change your mind along the way, this is probably not the right loan for you. Adjustable payments are hard to keep up with, when on a salary or hourly wage. It's very hard to maintain a budget when you don't know what your payment will be next month. So either refinance out of the loan before the rate adjusts, or choose a 30 year fixed product.

If you have no clue what type of home mortgage you need, our first time home buyer program will find the perfect fit for you. It allows credit scores down to 500! A loan expert can help you find out which loan option is the best for your situation right now.