First Time Home Buyer

Sometimes people need to get really creative when it comes to financing the purchase of their new home. They'll borrow from friends and family, maybe, to scrape up the down payment, then try to work out the best loan they can with their bank. Circumstances can arise where the bank will approve your loan - but only by so much. That means you need to get a second loan to make up the difference. When home buyers have one mortgage from two different lenders, this is known as a piggyback loan.

Piggyback loans refer to two lenders offering one loan. Like the name "piggyback" implies, one loan will be bigger than the other. Piggyback loans are good for people who want to buy a bigger or more expensive home, because through a piggyback loan the risk associated with lending is shared between two lenders, usually banks. Piggyback loans are also good for people who don't have a whole lot of money to put down on their down payment.

While piggyback loans may be just the ticket for some home buyers, they do come with their share of potential problems. For starters, on average, piggyback loans - consisting of two loans, with possibly two dissimilar interest rates - cost more than regular single mortgage loans. They can, since oftentimes there's not very much of a down payment involved, result in a significant balloon payment at some point that can really startle the home buyer, and possibly cause them a lot of problems.

Another potential difficulty stemming from a piggyback loan is the fact that if the borrower needs to get another loan, for whatever reason, they may have a harder time since any prospective lender will see that they already have two major loans they're paying off.

To learn more about piggyback loans, and whether a piggyback loan would be right for you, be sure to speak with a mortgage professional. He or she could explain to you the pros and cons of a piggyback loan in expert detail.

As a first-time home buyer, learning how to start the process can be pretty scary but knowing that there are advantages of buying your first home is hopefully incentive enough to get started. This year, in particular, there are a number of great perks for the first-time home buyer. So if you're thinking about taking that step, here are some benefits you can take advantage of

$8,000 Tax Credit

One of the major advantages of buying your first home in this period of time is the $8,000 tax credit that's a part of the American Recovery and Reinvestment Act of 2009. Actually, the credit is up to $8,000 and represents 10 percent of your home's purchase price still not bad at all. The credit is for the single taxpayer making no more than $75,000, and the married couple making no more than $150,000. However, the best part about the credit is that it doesn't have to be paid back. This is a huge incentive to anyone thinking about becoming a first-time home buyer.

Note: The credit only applies to those purchasing homes after Jan. 1 and Before Dec. 1 of 2009.

Mortgage Rates at All-Time Lows

Another huge benefit for the first-time home buyer is the fact that home prices have been dropping for several months and seem to be holding steady. Unfortunately, dropping prices is a side-effect of the onslaught of foreclosures. As a result of reduced property values, homeowners have had no choice but to sell at lowered prices just to get rid of their homes, while others have taken on short sells just to avoid foreclosure. This means you can take advantage of the deals.

Being a first-time home buyer in 2009 definitely comes with its perks. So if you're looking and ready to enjoy some of the advantages of buying your first home, now's the time to get in on the action.

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