The secret to becoming a first time home homebuyer : what you need to know.

Do you remember how it felt to hold the keys to your first home for the first time? Do you remember unpacking that last box? Were there quirks to that first house that you still laugh about? Did you buy your first home by yourself or with someone?

Becoming a first-time homebuyer is a deeply memorable experience, filled with a blend of excitement, pride, and a touch of anxiety. It’s the moment when dreams of owning a space to call your own transform into reality. The process, from searching for the perfect home to finally holding the keys in your hand, is both exhilarating and nerve-wracking. Every decision, every step, is charged with significance as it marks the beginning of a new chapter in life. The joy of creating a personal sanctuary, where future memories will be made, is an unforgettable milestone, leaving a lasting impression on your heart and mind.

It’s likely that no matter how imperfect that first house was you look back on it with some nostalgia because it was the first home you bought. That first big purchase is always memorable, and it should be. It’s a milestone and an achievement that should be celebrated.

Becoming a first-time homebuyer often involves navigating a series of significant hurdles that can be both challenging and daunting. The process begins with saving enough for a down payment, which can be difficult, especially in markets with rapidly rising home prices. Securing a mortgage adds another layer of complexity, as it requires a solid credit history, a stable income, and often, the assistance of a financial advisor to understand the various loan options.

• Low or Lack of Credit History
• Low Home Inventory
• No down payment

There are programs to help first time buyers clear those hurdles, such as, credit building cards, FHA loans that don’t focus heavily on credit score, new construction designed for first time home buyers, and down payment assistance programs.

For today, let’s focus on the hurdle of downpayment. The Arkansas Development Finance Authority has several programs that make purchasing a home more affordable for low-to-moderate income families and individuals. For eligible borrowers, these programs can greatly reduce the out-of-pocket expense to the buyer. Two of these program are the “ADFA Move-Up” Loan Program and the ADFA STARTSMART First Time Homebuyer program.

Current ADFA program for Arkansas allows for up to $15,000 in down payment assistance for qualified borrowers which can be used towards Down Payment and Closing Costs on the purchase of a home.  ADFA allows for that $15,000 to also be used towards Buyer’s Agent Commission as it is part of the cost of purchasing a home if stated in the contract.

Down Payment Assistance works as a loan in conjunction with the mortgage for the new home.  The loan is set on a 10 year note with the interest rate matching that of the mortgage.

For example:  if you were borrowing $15,000 (the full amount) to use towards the down payment and closing costs, and your interest rate is 6.375% (todays rate), your monthly payment would be $169 for the DPA.  This would be added to your total monthly payment.  So if you were buying a $250,000 house with a 3.5% down payment your loan of $241,500 would have a payment of roughly $1,750 a month which would bring your total payment to $1,919 a month with the DPA added.  A buyer could bring $0 to the closing and essentially finance the entire home this way.

For more information on these programs, visit the ADFA’s website.

While the hurdles to becoming a first-time homebuyer can seem daunting, they should not deter you from exploring your options. Every challenge faced along the way is a step toward the rewarding achievement of owning your own home. With careful planning, sound financial advice, and patience, these obstacles can be overcome.

The satisfaction of having a place to call your own, where you can build a future and create lasting memories, far outweighs the temporary difficulties of the home-buying process. It’s important to stay focused on your goals, seek support when needed, and remember that many have successfully navigated this path before you.

Embrace the journey, knowing that the outcome will be worth the effort.