Are you planning to buy a home? Great! To have a home is one of the most satisfying needs of humans. Moreover, when you purchase the property for the first time, you have a mixture of emotions. At one point, you are feeling happy, and on the other hand, you are confused & pretty occupied with handling legal & financial tasks.
First-time home buyers have not much idea about the process. The process starts when you decide the type of home you need. Therefore, the objective of your home should match your budget. Once you are clear with your home requirement & budget, then look for the realtors or home sellers that help you to achieve your personal goals.
After finalizing the home, you now need finance to take ownership of the property. Below you’ll catch some practical & useful mortgage tips for the first-time home buyer process.
Mortgage Selection Tips
➤ Explore Mortgage Options
Don’t go with a fixed picture; look for several options available in the financial market.
Here are the main categories:
- Conventional Mortgages: These loans are not guaranteed by the government. The loan guarantees are either taken by the private lender or the two government-sponsored enterprises—Fannie Mae and Freddie Mac. Moreover, the interest rates are high.
- FHA Loans: Federal Housing Administration insures these loans and down payments as very low.
- USDA Loans: The U.S. Department of Agriculture approves these loans, especially for rural homebuyers. Generally, it’s free of down payments.
- VA Loans: Department of Veterans Affairs guarantees VA loans. People who are currently or had served the veteran military service can opt for the loan. The loan also excludes down payments.
First-time home purchasers can also buy a 30-year fixed-rate mortgage. It gives the buyer time to pay the loan. However, the interest rate will be more than the 15-year loan term. It depends on individual financial circumstances.
➤ First-Time Home Buyer Assistance Programs
There are some states, cities, and counties that provide first-time homebuyer programs. It’s a big advantage to the buyers as the interest rates are low. Even the buyers can avail of down payment assistance & tax credits.
➤Compare Mortgage Rates and Fees
Once you have gone through a list of mortgage options. Ensure to compare mortgage rates & fees. Sometimes lenders give borrowers discount points when borrowers pay an upfront cost to lower interest rates. The discount points make sense to the borrowers who have money on hand and plan to stay in the home for the long term.
➤Get a Pre-Approval Letter
Apply for the pre-approval letter to start home shopping. Here, lenders will verify your income, assets,& debt. One analyzed lender offers to loan you a certain amount based on some specific terms & criteria.
Mortgage decisions are not easy for first-time home buyers. Check out the things to consider before taking a first time home loan. They need better assistance, so follow these steps to make your mortgage decision smooth & transparent.