Buying your first home may well be the most important financial commitment you will ever make. More than likely you will be paying off your home for decades to come, and a small difference in your interest rate can make a big difference in your monthly payments. Getting the lowest interest rate can save you thousands or even tens of thousands of pounds over the life of your home mortgage loan. There are many things to consider when shopping for first time home mortgage loans.
There are many factors that affect rates for first time home mortgage loans. The overall interest rate landscape is, of course, the biggest factor, but the interest rates are also affected by the borrower’s personal credit history, their credit score and their income. The interest rate for first time home loan will also vary from lender to lender, so it always pays to shop around for the best interest rate on your first time home mortgage loan.
How much money will I need to purchase a home?
That depends on a number of factors, including the cost of the home and the type of mortgage you choose. You will need to take any closing costs or points into account when shopping for your first time home loan. Generally speaking, you will need to have enough money on hand to cover three individual costs:
1. Earnest money – Earnest money is the deposit you will need to make when you submit your offer to the buyer. This is used to prove to the seller that you are serious about purchasing the home.
2. The down payment – The down payment is a percentage of the purchase price that you must pay at settlement. The minimum down payment is typically 10% to 20%. If your down payment is less than 20% of the home cost, you may be responsible for purchasing private mortgage insurance.
3. Closing costs – These are the costs required to process the paperwork for the home mortgage loan.
You will need to have enough money to cover all these potential costs it is also a good idea to have some extra cash for emergency expenses associated with home ownership. Borrowers would do well to not forget about these expenses when shopping for their first time home loan.
How do I know if I can get a home loan?
It is a good idea to use an online mortgage calculator to determine how much you can afford to borrow. You simply enter the amount of the loan, the interest rate and the length of the loan. The mortgage calculator will calculate your monthly payment. By changing the assumptions, you can see the affect of various interest rates and loan terms on your monthly mortgage payment. Use this calculator to determine the monthly payment you are comfortable with, and this will help you determine how much you can afford to borrow on your first time home loan.
How do I find a lender for my first time home loan?
Your home loan can be financed through a bank, a credit union, a savings and loan association, a specialty mortgage company, or through various national lenders. Shopping for your first time home loan is just like shopping for any other major purchase. You will want to make sure you get good value for your money. You can save a lot of money by shopping around at different lenders. Different lenders can offer vastly different loan terms, interest rates and fees. Get several offers and compare them to determine the best loan for your needs.