First Time Home Buyer Tax Credit Assistance and Federal Government Home Loan Program with Low Down Payment on FHA Mortgages. Buy Bank Foreclosed Homes at a Discount. Go To RealEstateMarketingThisWeek.com Part 2 (Excerpt) The median income family can afford twice the median priced home; prices drop over 50% And now I mentioned Dan Havey is back in the studio with us, Dan has done a lot of great things in the mortgage industry. He left us about a year and a half ago, is that right Dan? Yes, I left the mortgage industry in October of 2007. Tell us a little bit more about yourself. As you know I came originally from Wisconsin, where I got a degree in Business Finance and I came out here in 1989 and started working with my brother selling real estate owned-REO, bank owned properties for Fannie Mae, Countrywide, and the Resolution Trust Corporation-RTC which was the government entity that was put in charge of disposing of all the real estate owned by the 1800 S&Ls that had failed. I did that until about 1995 when I moved into the mortgage industry and there for 12 years I worked predominately with bankruptcy attorneys helping their clients get out of bankruptcy and foreclosure. I left the mortgage industry in October of 2007. Now I am working predominately in the arena of marketing for real estate and mortgage companies, helping out companies, just like Im here helping out Michael today, to get people to realize that right now actually is a really good time to buy.

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Being a First Time Home Buyer can increase the difficulty in the process of obtaining financing, not only due to the lack of credit history but because of the inexperience and lack of knowledge on the field. Following, you will find some tips to help you get started.

The Down Payment Issue

A down payment in the range of 10% to 20% is usually required for obtaining a home loan to buy a house. There are also closing costs that you will need to pay in order to secure the loan.

If you add up these two factors, very few can afford putting down this much money. The financial industry, however, has found a solution to this problem and offers a different financial option.

Zero down mortgage loans are meant for those who cannot put away enough money for a down payment. With these loans you can finance 100% of the property value.

Moreover, for those who cannot even raise the money for closing costs, there are lenders offering 103% or 105% finance home loans.

The extra percentage is used for covering the closing costs which will then be included in the overall debt that you will have to repay in monthly installments.

Drawbacks of Lack of Down Payment

Zero down mortgage loans sound tempting but though not having to put money down in order to purchase a house can seem to be a fabulous waiver, it has many drawbacks and unless strictly necessary, it should be avoided by all means possible.

A down payment has not only direct positive financial consequences but it also can be a positive factor when the lender has to decide whether to approve your loan or not and on what terms.

When the lender has to consider your application, a down payment tells him that if you were able to save enough money to make a considerable down payment, you will probably be able to meet your monthly payments without any difficulty.

A down payment will also imply that you have the ability to obtain finance elsewhere and so, the lender will try to offer you a more tempting loan proposal in order to keep you as a client.

Those who can offer a down payment always get a considerably lower interest rate than those who cannot. As you can see, a down payment reduces dramatically the risk implied for the lender in the financial transaction, and thus, you will be able to get a better deal on your loan.

A down payment will not only reduce the interest rate you pay; it will also lessen all the other loan requirements and will turn the loan terms more flexible. You will be able to get stretchy monthly payments and larger loan lengths too.

Home Equity Loans

If you wanted to use that money for making home improvements or for other expenses, you do not need to worry. Once the deal is closed, the amount you had to put down will become home equity and you will be able to request a home equity loan for the difference between your home value and the amount owed on the mortgage.

These loans are secured and carry low interests; they are the perfect solution if you ever need the money you used for the down payment.