Things have certainly changed since our parents or grandparents bought their first home. First-time home buyers often find themselves in the dark about what options they might have in today’s market. Speaking to someone who knows how to educate you on the truths, as well as the misconceptions, of buying a home is the first, best thing you can do for yourself.
First, it’s important to understand that a first-time home buyer is not necessarily a first-time home buyer.
“A first-time buyer is someone who has not owned a home for three years or more,” said Ed Moloney, of Equity Resources, Inc., in Falmouth. “If you owned a home 10 years ago, but not since, you are considered a first-time buyer.”
Second, it’s crucial to know what kinds of buying options are available to you. The days of needing to come up with a huge down payment are virtually over, as newer programs have been created to better help those looking for the chance to own a home.
“Most first-time home buyers say ‘I want one hundred percent financing,’” said Moloney. “Every loan that’s 100 percent financed has its own set of rules and requirements. For example, VA loans (which are not just for first-time buyers) are 100 percent financed but, if you’re an unmarried couple, your non-veteran partner may not be able to be on the loan.
“Also, the US Department of Agriculture does a 100 percent financed loan, but you can’t buy in an area that’s determined to be a city. Some loans require certain debt-to-income limits. A USDA loan is a little tighter than most. There are income-based loans, as well,” he said.
“There is Massachusetts Housing, whom I’m licensed with, which offers income-based loans. They have a first and second mortgage there for 100 percent financing. Then there is FHA (Federal Housing Administration), and down payment assistance is available with that program as well.”
According to Moloney, anyone considering buying their first home should first speak to him so he can help them create a plan, and find out what’s available to them.
“My big belief goes back to the original idea of having time and a plan,” he said. A hundred percent financing, while it sounds great, can bring with it its own problems, he added. For example, when you go to buy the house, you have nothing to put down. One hundred percent financing often comes with a higher rate and higher cost.
“When I work with clients, we try to figure out how to pull together a down payment – maybe get it as a gift, or take a loan out of a 401K – we look at all the options. Then I show them the programs with low down payments. For first-time buyers, home-possible and home-ready are Fannie Mae and Freddie Mac’s income-based programs. As a first-time buyer, you would take an education class that’s part of it.”
First-time homebuyer educational courses are offered throughout the Commonwealth of Massachusetts and are required for participation in most first-time homebuyer programs and loan programs.
“I’m a big believer that most programs aren’t just niched to first-time home buyers, but it’s more the overall piece. Don’t get hung up on the ‘first-time buyer’ part, but more as understanding the part that might work best for you.”
Product is important, but so is understanding, Moloney said. What it comes back to is taking the steps and getting educated. “The majority of my first-time buyers come to me through a phone call or a Skype call. Their mother, brother, uncle or colleague has said to them, ‘You know, you should talk to Ed’.”
Moloney said he thoroughly goes over all information with potential clients. “We’re going to go through debt-to-income. We’re going to go through what credit is. We’re going to talk about down payment. We’re going to talk about loan programs. It’s the education. The planning is so imperative. Maybe it’s moving debt. Maybe it’s consolidating debt. Maybe it’s something refinanced. Maybe it’s knowing the difference between a gift and a loan from a family member. There are so many pieces.”
For the first-time homebuyer, it’s never too early to start talking. “Are there programs and products? Yes. Are they only for the first-time homebuyers? No; sometimes that’s just marketing. In reality, we simply try to fit all the pieces to the client. But the first-time homebuyer has a lot of options. I will give the client all the pros and cons. If I find a niche product somewhere else that would be better for them, I’ll send them there. Why? Because 16 years of building my business is doing the right thing.”
Learn more about Edward Moloney and Equity Resources at www.callequitymortgages.com/ed-moloney.
Edward Moloney
Equity Resources, Inc.
465 E Falmouth Hwy Ste B, East Falmouth, MA 02536
(774) 573-0329
Corporate NMLS: 1579, Edward Moloney NMLS: 10321
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