Don’t Fret, First-Time Home Buyers : How To Make A Down Payment
The time has finally come, you are looking for your future home. This is an exciting time for everyone, but it is also a nerve-racking time. The idea behind mortgages, making down-payments, financing, and different kinds of loans can be overwhelming. However, it is possible and can be a less overwhelming task than many believe.
First-time homebuyers face many more hurdles than more-experienced, repeat buyers. This is because typically he or she is younger; which can lead to less savings, student debts, and other financial burdens.
First, What Is A Down Payment On A House?
A down payment on a house is the amount of money you spend upfront to purchase a home. It is combined with the home loan to fulfill the total purchase price of the home. When putting a down payment on a house, the bank will also look at your credit score, credit history, current debt, and your annual income. However, the higher your downpayment is, the lower your monthly mortgage payment will be.
A simple way to look at a down payment is: If you buy a house for $200,00 and borrow $190,000 you would put 10 percent down on the house.
Second, What Is A Mortgage?
A mortgage is a loan. You take this loan out with a bank or other lenders that have the best rate possible for your personal needs. It is important to shop around for a mortgage before shopping for a home. After you find the perfect rate, you need to be approved by said bank or lenders. This shows realtors that you are serious about buying a home, and it will let you know what you can afford. You can get mortgages at the following places:
- Banks: This is a great place to start when looking around. Your bank can offer several different rates and loans to be accommodate your needs.
- Nonbank Lenders: These companies are willing to work with people that banks call “high-risk profiles.” If you have some financial problems or poor credit, this is the first place to check out.
- Mortgage Brokers: These are specialists who can walk you through more options and often work with many lenders, so they can find the best possible rate for you.
While shopping around for your mortgage and trying to figure out who can best help you, go to a mortgage calculator. This will give you a clearer idea of your budget.
Third, What Are The Different Kinds Of Loans Available To First-Time Homebuyers?
When you finally get a mortgage approval, you’ll need to figure out which loans to use. There are different types of loans with fixed rates and adjustable rates. However, certain loans are made for first-time buyers. These loans are:
- FHA Loans: This is a loan from the government and has a low down payment available, at 3.5 percent.
- VA Loans: These are loans for Veterans and their family members. You can finance your home 100 percent, which means no down payment needed.
Fourth, What Can First-Time Homebuyers Really Afford?
When you are a first-time homebuyer, you may want the perfect home, but this is not always affordable. Make sure you calculate how much you can afford on a loan and include an interest rate within this. Don’t let your “wants,” overtake your “needs,” and put you and your family in a financially stressful situation for the foreseeable future.
If you are looking for someone to help you with finding your first home, contact us today.