First Equity Home Loans
For a person who is first time buyer of a house, there is an option of availing of a loan option which is known as first-time buyers loans, for financing the purchase of the new home. A little detail of this option is now being given below.
First-time buyer loans are not necessarily restricted to buyers who are buying a house for the first time. This option would also be available for those persons who fulfill the following conditions:
a) Buyers have to prove that they have not owned a home within the previous three years.
b) Buyers should not own any house at the time of purchase of the new house.
Lenders would provide this type of loan to those buyers who would be purchasing their house within a designated census tract and they should also have limited resource to make such a purchase.
This scheme would also apply to people of lower income level. First-time buyer loan is generally applicable to certain geographical areas which are designated as lower income area. To be eligible for such a loan, the income of the household should below 70% of the country’s median income.
First-time buyer loans would vary depending on the type of financial support being provided to the family. These could be:
- Accept a very low or no down payment
- Cover all or parts of interest costs
- Limit fees that lenders are authorized to charge
- Defer payments by extending grants
- Forgive loans
The advantage of first-time buyer loan scheme is that such a loan enables purchasers to attain the status of a house owner more easily. As homeowners maintain their properties and contribute to the economy, the community of the place where the house is located also gets the benefit from these first-time buyers.
In any scheme, there will be some disadvantages. There are some disadvantages for first-time buyer loan scheme too.
The disadvantage of such a scheme is that such a scheme is administered with strings attached and has many restrictions attached with. Firstly, there is a limit on the price of a property that could be purchased. Such a limitation would force the buyer to be restricted to homes on the lower side of the market.
Secondly, the property must be used as the purchaser’s primary residence. Thirdly, the targeted property must satisfy certain requirements like being from safety hazards and it is maintained in good condition.
Basically, it could be considered as an affirmative action to provide poorer section of the populace with their own homes to live in.
