First-time home buyers have lots of hurdles to climb during the transaction that is considered the most expensive purchase you will ever make. I'm talking about buying your first home. The hurdles, though, can be overcome relatively easily by having a trained professional on your side and by knowing what's in store. To that end, here is Step 3 in "Nine Steps to Buying a Home." It is my hope that you will find valuable information in this series that will help you not only negotiate the real estate sea on which you currently find yourself but also that you will be clearer about what to expect from here.
Step 3: You'd Better Shop Around
As in many things, not all home loans are created equally. As a result, when you are ready to get pre-qualified (which we highly recommend), it will be necessary to do even more homework in shopping for the best home loan for your needs and situation.
There are different types of loans:
- Fixed Rate Mortgage - the interest rate is locked in and will not change during the life of the loan no matter the changes in current market conditions.
- Adjustable Rate Mortgage - the interest rate can increase or decrease based on current market conditions.
- FHA loan - a fixed rate mortgage loan for first-time home buyers and people with moderate to low income; guaranteed by the Federal Housing Administration; lower down payment amount (typically 3%); typically a lower interest rate.
- VA loan - specifically for active military servicemen and women or their surviving spouse; typically little or no down payment required
- Balloon Mortgage - the term of the loan is typically between 5 - 7 years; at the end of the loan term, balance must be paid in full
- Interest Only Mortgage - pay only the interest on the loan for a set amount of time; once the interest only period ends, payments increase to include repaying the principle.
There are lots of variations as well as differences based on the interest rate you qualify for. When you are ready to pursue a loan, let me know and I can recommend loan officers who are good at finding the perfect loan for your needs.
Next week, we'll talk about Home Buying Options!
RE/MAX Excellence Realtor with Architectural Dimension
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