Getting a Loan for your First Home
April 20, 2017
Buying your first home is always an exciting yet daunting project. Financing the purchase of your first home will be your main priority. Getting a loan from banks or other financial institutions is easy if you draw up a suitable and sensible plan.
Before going to a bank for the loan to finance your first home, make sure that you can afford the home. You can search online among banks and financial institutions about the different mortgage types and rates. The websites usually have a mortgage calculator tool that will help you to establish whether you can repay the mortgage on your first home comfortably.
Pre-qualification and Pre-approval
You can discuss with the mortgage officer of the bank or financial institution about what type of loan will meet your needs and how much you can borrow. Financial institutions and banks give letters to prospective home buyers giving the sum they can borrow based on the information provided. You can show this pre-qualification letter to get a loan like the Montgomery OH First Home Loan to the real estate agent while looking for the best home that fits in with your budget. When you find your ideal first home and you plan to buy the home within three months, you can apply for pre-approval of the home loan. You will need to give all the details required for applying for a mortgage including your assets and income for pre-approval and the bank or financial institution will give a conditional approval of your eligibility to get an appropriate loan.
Types of First Home Loans
There are different types of loans for first home buyers. If you have a good credit history and can make a specific down payment, you can get a low interest fixed rate loan. Adjustable rate mortgages will offer low initial short term rates and monthly payments after which the rate may increase or decrease. If you do not have a good credit score and if you do not meet the stringent qualifications required for other mortgage loans, you can choose a government insured FHA or Federal Housing Administration loan. You will need to pay mortgage insurance premiums to protect the lender in case you default. If you are a United States Veteran, you could qualify for a VA loan. These loans are backed by the US Department of Veterans Affairs.
The down payment that you pay determines how low your mortgage interest rates will be. The down payment is the portion of the cost of your home that you will pay at first. If you pay a high percent of the purchase price of the home as down payment your mortgage payment rate will decrease.
Before you get a loan to buy your first home, making a plan on the amount you can afford to pay for the home by talking to mortgage loan officers of banks or financial institutions will help you make the project of buying the home a pleasant and seamless one.