While buying your first house is an incredible experience, it can also be challenging, especially when it comes to selecting a first time home buyer loan. With so many mortgage options to choose from, it is difficult to understand which will be the most advantageous for your budget and plans for the future. As a result, the professionals at BrightPath have outlined what to look for in a first time home buyer loan to ensure you select the best mortgage to get you into your new property.
The professionals at BrightPath will work hard to get you the right mortgage to fit your needs.
Understanding First Time Home Buyer Loans
If you have never owned a house, first time home buyer loans are designed to offer you lower monthly payments so you can afford to purchase your new property. Unlike conventional loans with down payment requirements of 20%, these loans will accept down payments as low as 3.5%. So, even if you do not have as much money in your savings to put down upfront, it does not disqualify you from becoming a homeowner. In many situations, these loans can even be adjusted to fit your individual circumstances.
What to Look for in a First Time Home Buyer Loan
While there are several first time home buyer loans to choose from, not all mortgages are created equally. As a result, it is important to shop around and understand what to look for to determine which one will work best for you.
- Loan terms. When it comes to choosing your loan terms, consider your finances. While adjustable rate mortgages offer lower introductory rates, the interest can change throughout the term, which may be costlier overall. And while a fixed rate mortgage will reduce your monthly payments, you may end up spending more money on interest over time.
- Private mortgage insurance. While first time home buyer loans offer lower down payments, that benefit does come with a caveat. It requires you to pay for private mortgage insurance (PMI). This is a type of insurance that you are required to pay if you put less than 20% down on your home. It is designed to protect the lender in the event you default on the loan. Since this cost is rolled into your monthly mortgage payment, it is important to crunch the numbers to determine if it is worth saving money on the down payment.
- Federal Support. Though there are many first time home buyer loans to choose from, those backed by the government tend to be popular because they are easier to qualify for. Since the lender is protected if you cannot make your mortgage payments, they are more willing to offer lower interest rates, which can save you money. These loans also tend to accept applicants with lower credit scores, so they are more accessible. Based on your qualifications, you may be eligible for an FHA loan, VA loan, or USDA loan.
Work With the Experts at BrightPath to Get into Your First Home
While selecting a first time home buyer loan can be a daunting experience, you do not have to go through it alone. With the professionals at BrightPath by your side, you will be equipped with the insights and guidance you need to make the best decision for a better tomorrow.
To learn more information about first time home buyer loans and to schedule a consultation, contact us today.
At BrightPath, you will get the loan you need to purchase the house of your dreams.