5 Useful Tips for First Time Home Mortgage Borrowers
Today’s guest blog post courtesy of MortgageFit:
Shopping around for a home mortgage can be confusing. It’s not unusual to get worried about performing something new for the first time. This applies to taking out your first home mortgage as well.
Luckily, there are some easy tips that you can follow to ensure you’re geared up prior to searching for your first home loan. Given below are 5 simple tips that can assist first time home buyers:
1) Lock your home loan interest rate
Mortgage rates can go up or down on an everyday or hourly basis. Talk about your interest rate expectations with the loan officer and try to understand how rises and falls in your interest rate might affect your monthly loan payment and your ability to become eligible for that loan. To save yourself from interest rate hikes, request for a rate lock, which can preserve a particular interest rate for you for a specific period of time. If you’ve made a decision to lock your rate, just ensure that your lock-in period doesn’t run out before the date of closing.
2) Think about an FHA loan
If you’re buying a home for the first time, you might wish to shop for an FHA mortgage, which is a loan that is backed by the Federal Housing Administration or FHA. FHA loans frequently come with competitive interest rates and lower down payments. It’s easier to qualify for FHA loans than other types of loans. The minimum amount of down payment for an FHA loan is just 3.5% of the purchasing price of the house. However, these loans necessitate that you buy private mortgage insurance (PMI).
3) Avail the tax credit
If you haven’t purchased a home in the last three years, then you might be eligible for the Federal First Time Home Buyer Tax Credit of up to $8,000. This credit is reimbursable which implies you’d even receive a rebate of sorts from the Federal government if your amount of outstanding taxes is lower than the total amount of the credit. The credit is dependent on income limitations.
4) Train yourself
A basic 15 or 30-year fixed rate mortgage is quite simple to understand. However, other types of loans might be more complex to understand. If you want to go for an adjustable rate mortgage (ARM) or other unusual types of loan products, you should explore them and ensure that you comprehensively understand how these loans work prior to signing the loan agreement.
5) Shop around
Loan products, interest rates and loan terms differ among lenders. This suggests that all borrowers whether first time or not, must shop around for loan offers. Make questions about the pros and cons of every loan offer and make sure to compare the approximate closing costs, quoted points and interest rates on various loans.
Following the above mentioned tips would help you choose a home loan that’s most suitable for your personal situation.