Mortgages and First Time Home Buyers
The process of understanding mortgages is one of the most difficult parts of purchasing a house for the first time, and entering the world of the first time home buyer. Because most individuals don’t have the financial ability to pay for a new house outright, they must start buying a house by seeking out a mortgage loan from either a credit union or a bank. Basically, you’re agreeing to a plan where the bank will lend you a certain amount of money in exchange for the right to foreclose on your house if you don’t make the payments on time. However, because the bank will not typically do 100% financing of any loan like this, you have to have the down payment saved up and ready to put down on your own. Usually, it’s about 75-80% of the selling price that is included in the mortgage loan.
The rates of repayment determine the type of mortgage you have on the house. For example, there is an adjustable rate mortgage where the amount of interest that is due on the loan actually resets every year. Keep in mind that interest rates can significantly increase, even if they start out lower and this could affect your house payment budget. If you really want to decrease the monthly payment of the loan, then try to put as much down as possible at the onset of the mortgage.
Another option is to go with the fixed rate of interest on the life of the mortgage, but this means your payment will never change. The time length of the loan does make a big difference here, because clearly the longer you pay, the more interest is going to accrue. Some people choose to pay a higher payment with fewer years just to decrease the amount of interest you’re paying in. To get some custom advice on your particular situation, talk to a mortgage pre approval specialist and see what their suggestions are. After you have obtained this helpful instruction, it will be easier for you and your family to choose the perfect house for your needs.
Home loans also change with the economy and whether things are focused more on the buyer or seller, so keep that in mind when you’re doing research. FHA loans and others that restrict your areas to buy are often the perfect solution for first time buyers with a larger down payment. To get special advice for certain consumer groups, find out which armed forces loans or VA loan lenders operate in your region and what they can offer you.