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Buying a house is a huge investment and typically the person’s largest purchase. It’s a big decision, but it can also be very rewarding. To make sure you know all of your options before starting the process, this post will cover some of the different mortgages available to first-time buyers.
Mortgage Options for First Time Home Buyers
If you are a first-time homebuyer, you may be looking for some assistance when it comes to figuring out how to purchase your first home. A mortgage can be used to purchase a house or other form of real estate, in which the borrower is given funds by a lender in exchange for repayment of the principal amount with interest. Mortgages typically provide financing for homeowners who would otherwise rely on cash or credit cards to pay for their monthly housing costs. There are many options available when it comes time to find the right mortgage. One way would be to contact your bank or credit union about their home loan options.
How to Find the Best Mortgage
The cost of a mortgage will depend on the size of your down payment, length of the loan, and interest rate. To find the best mortgage for you, compare your options. Start with getting pre-qualified by a lender. The lender is going to ask questions about how much you earn, how long you’ve been at your job, and what type of credit history you have. You’ll then get an idea of what kind of loan is available to you and if it’s within your budget. What is a Bank Statement? A bank statement is an official record of the transactions conducted on your account during a specific time period. If you are not yet a customer of the bank, then you will need to open an account with them.
Interest Rates for First-time home buyers
Qualifying for a mortgage is no longer as difficult as it used to be. Under the new HARP (Home Affordable Refinance Program) guidelines, many first-time homebuyers qualify for rates of 3.3% or less. When you combine this rate with low down payment options, there are more first-time homebuyers that can enjoy the benefits of homeownership than ever before.
You should our content about a loan amortization schedule.
Top 5 Mortgages for First Time Home Owners
If you’re a first-time buyer, here are the top 5 mortgages to consider:
- Conventional loans
- VA loans
- USDA loans
- FHA loans
- USDA Rural Development loans.
Learn about the top 5 mortgages for first-time homebuyers.
Conventional loans are the most common type of home loan. They can be obtained through banks, banks, credit unions, and mortgage brokers. The requirements to qualify for this type of loan are low unlike other types of mortgages. There is either a 20% down payment or there is enough income to cover the full monthly payments throughout the term of the mortgage. Conventional mortgages are also easy to qualify for because they don’t take into account your personal debt-to-income ratio or your credit score.
The VA loan is a mortgage program for veterans to purchase a home with no down payment. The VA Home Loan program also has no monthly mortgage insurance, which means your total housing payment will be lower. Another benefit of the VA Loan is that it may be used in conjunction with other types of loans, including FHA or Conventional mortgages.
This home loan is exclusively for low- to middle-income families who meet the requirements of the USDA Rural Development mortgage program. It’s a great option if you’re a first-time buyer in a rural area with a limited income or work in agriculture. You’ll have to pay at least one percent down and have an excellent credit score, but you’ll get affordable rates and can finance 100% of your purchase.
FHA loans offer many benefits for first-time homebuyers. One benefit is that these loans allow for down payments of 3.5%. FHA loans also don’t require a credit score but do require a down payment and monthly mortgage insurance. A negative aspect of the FHA loan is that they usually require an upfront mortgage insurance fee.
USDA Rural Development Loans
If you’re a buyer looking to purchase a home in an eligible rural area and your income falls below the median for the county, you may qualify for a USDA Rural Development loan. The property must be your primary residence and you can use this loan to buy, build or renovate a house, mobile home or apartment.