Examples of Loans For First Time Home Buyers
Many first time home buyer programs have fixed rates that do not change as often as a “normal” mortgage does. The “normal” loans like the FHA or Conventional 30 Year Fixed change daily, sometimes more than a few times a day. What this means is that, when mortgage rates are going up, the state-sponsored first time home buyer program may be cheaper for a period of time.
A really good example of that now is the Illinois Home Start program. This loan is a 30 Year Fixed at 4.75%. This was where rates were for conventional and FHA loans were back in Thanksgiving, but now those “normal” rates are almost .50% higher. What this means is that the Illinois first time home buyer program is .5% “too low.” Can a mortgage rate really ever be “too low?”
On a $200,000 loan, this difference is just over $60 per month for a loan at 4.75% versus 5.25%. When rates are rising, these loans for first time home buyers via the state can be a great deal. The payments are $1043 or $1104. For a home buyer who is getting a loan with otherwise similar terms, this is a 6% per month difference just in loan selection.
Currently, the Illinois first time home buyer program has a 5.25% interest rate option on a down payment assistance program. The HOME START Down Payment Assistance Loan. The second loan under the Home Start program is the Home Start Down Payment Assistance (DPA) Loan which allows Illinois first time home buyers to access additional funds upfront to help with the down payment. The DPA Loan is a 10 year, 0 percent, non-amortizing, forgivable loan in the amount of 3 percent of the purchase price up to $6,000.
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