First Time
Home Loans
by Ellise Walsh
Buying your first home may well be
the most important financial commitment you will ever make. More than likely
you will be paying off your home for decades to come, and a small difference
in your interest rate can make a big difference in your monthly payments.
Getting the lowest interest rate can save you thousands or even tens of
thousands of dollars over the life of your home mortgage loan. There are many
things to consider when shopping for first time home mortgage loans.
There are many factors that affect rates for first time home mortgage loans.
The overall interest rate landscape is, of course, the biggest factor, but the
interest rates are also affected by the borrower’s personal credit history,
their credit score and their income. The interest rate for first time home
loan will also vary from lender to lender, so it always pays to shop around
for the best interest rate on your first time home mortgage loan.
I don’t have much money for a down payment. Can I still get a home mortgage
loan?
If you do not have a big down payment to make, you may be a good candidate for
one of the federal mortgage programs that are available. A good place to start
is one of the HUD funded housing counseling agencies. The staff at these
agencies can help you navigate through the various options to determine the
best program for your situation. These types of federal loans are very popular
with people seeking first time home loans.
How much money will I need to purchase a home?
That depends on a number of factors, including the cost of the home and the
type of mortgage you choose. You will need to take any closing costs or points
into account when shopping for your first time home loan. Generally speaking,
you will need to have enough money on hand to cover three individual costs:
1. Earnest money –
Earnest money is the deposit you will need to make when you submit your
offer to the buyer. This is used to prove to the seller that you are serious
about purchasing the home.
2. The down payment
– The down payment is a percentage of the purchase price that you must pay
at settlement. The minimum down payment is typically 10% to 20%. If your
down payment is less than 20% of the home cost, you may be responsible for
purchasing private mortgage insurance.
3. Closing costs –
These are the costs required to process the paperwork for the home mortgage
loan.
You will need to have enough
money to cover all these potential costs; it is also a good idea to have
some extra cash for emergency expenses associated with home ownership.
Borrowers would do well to not forget about these expenses when shopping for
their first time home loan.
How do I know if I can get a
home loan?
It is a good idea to use an online mortgage calculator to determine how much
you can afford to borrow. You simply enter the amount of the loan, the
interest rate and the length of the loan. The mortgage calculator will
calculate your monthly payment. By changing the assumptions, you can see the
affect of various interest rates and loan terms on your monthly mortgage
payment. Use this calculator to determine the monthly payment you are
comfortable with, and this will help you determine how much you can afford to
borrow on your first time home loan.
How do I find a lender for my first time home loan?
Your home loan can be financed through a bank, a credit union, a savings and
loan association, a specialty mortgage company, or through various state and
federal government lenders. Shopping for your first time home loan is just
like shopping for any other major purchase. You will want to make sure you get
good value for your money. You can save a lot of money by shopping around at
different lenders. Different lenders can offer vastly different loan terms,
interest rates and fees. Get several offers and compare them to determine the
best loan for your needs.
