First time home owner loan
Are you feeling overwhelmed with the sheer number of different types of mortgage loans? Not sure which one will work best for your situation and needs ? Read on for tips to help you compare the advantages and disadvantages to the most common types of mortgage loans . It is important for people who are taking first time home owner loan s to understand the different loans options and their pros and cons.
Difference between adjustable and fixed mortgages
When taking first time home owner loan s it is important to understand the difference between a variable or adjustable interest rate mortgage and a fixed rate mortgage . With a fixed rate mortgage you gain the advantage of monthly mortgage payments that do not change ; however, your interest rate may be slightly higher than what is offered with an ARM . With an adjustable rate mortgage while you will typically have a lower introductory interest rate, that rate may fluctuate over the duration of your loan . This can mean your monthly mortgage payments may become higher or lower, depending on whether interest rates are raised or lowered .
Beyond adjustable rate mortgages and fixed rate mortgages you also have other options in terms of how long you finance your home. The most common terms are 15, 25, 30, 40 and now even 50 year mortgages in some areas. Keep in mind the longer you finance your mortgage the less your payments will be per month but the more you will pay in interest over the duration of the loan .
For first time home owner loan s there are also special types of loans offered which may offer certain advantages . These types of mortgages include FHA and VA home loans . A FHA home loan is often attractive to first time home buyers because it allows the purchase of a home with a lower down payment, in some cases as low as 3% . There are certain qualification regulations in order to be approved for a FHA home loan ; however. You must have good credit history and enough income to cover the loan and your other financial obligations . Typically, all of your housing costs each month, including house note, property taxes and insurance cannot exceed 29% of your gross monthly income . In addition, your housing costs plus your other monthly long-term debt should not exceed 41% of your gross monthly income .
VA loans are made available to veterans of the U.S. armed services for the purchase of homes. With this type of loan you can purchase a single family home, condo, new construction or even a manufactured home . You should be aware that youll usually need to pay a 2% fee when the loan is closed. One of the best advantages to this type of loan is that 100% financing is available . In addition, you dont have to worry about private mortgage insurance, which is required in certain cases when you are financing more than 80% of the homes value . You may also be able to take advantage of a competitive interest rate.
Alternative optionsThe other options for first time home owner loan s include balloon mortgages and hybrid mortgages. With a balloon mortgage you may be able to lower your monthly payments by agreeing to pay a portion of the mortgage in a lump sum at the end of the mortgage . The disadvantage to this is that you will have to come up with the money or try to extend the loan ; which may or may not be available.
With a hybrid loan you can sometimes take advantage of a lower interest rate in the beginning of your mortgage, perhaps for three to five years, when you may be struggling more to make the payments . After this time period has passed, the interest rate will rise and you will be responsible for a higher monthly mortgage .
Steps to followWhen you are in the process of looking for first time home owner loans, there are some essential steps that you should be aware of . The most important consideration should be the sales price of the home . Just because its the best home in the neighborhood, that doesnt mean that you should pay a lot more for it. In fact, experts tell us that the best house in the neighborhood probably wont sell for much more than the other homes in the area . You should look to pay not more than 10-20 more than the other homes in the areaÂno matter how much nicer the home is . Anything higher than that is based on emotionÂnot businessÂand will probably cost you when you go to sell it.
Next, you should take a serious look at the neighborhood itself. You should not commit the mistake of buying more than you can afford. One way to do this is by being pre-approved by your mortgage company. This will tell you exactly how much you can afford to pay, and that will automatically slim down your options . A good rule of thumb when youre shopping is that your mortgage payment shouldnt exceed more than 36 percent of your income .
Lenders for first time home owner loan sSome of the lenders are mentioned below:
Alliance Mortgage:
You can contact them at Alliance Mtg Inc., 18000 Studebaker Rd Ste 700, Cerritos, CA 90703; phone: 1.562.467.6943; you can also fill out their online contact form for more details .
Nationwide Mortgages:
You can contact them at Nationwide Mortgages - West Coast 701 Palomar Airport Road, Ste . 300 Pacific Center, Carlsbad, California 92009 . OR At Nationwide Mortgages - East Coast :"> 1775 The Exchange Suite 210, Atlanta, Georgia 30339 . Toll free: 1-800-584-0694 Mon-Fri 8:00 a.m - 6 p.m. Pacific.
Five Star Mortgage:
You can contact them at Toll Free: 800-871-2636; Fax number: 888-667-5484; email: loans@fivestarsmortgage.com.Other Articles
