If you're thinking about buying your first home you may be having second thoughts because of these tough economic times. You're not alone. It's no secret that many people are unsure of their financial futures. This uncertainty, along with a lack of confidence in the economy, has families cutting back and saving more (which we should be!)
Don't let the current economic situation get you down. There is a bright spot in these tough times.
Mortgage rates are at historic lows. Really, rates haven't been this low since Eisenhower was president in the 50's! This has created a unique opportunity to lock-in a low monthly payment and mortgage rate when you buy your first home. Locking-in a lower rate could save you thousands in interest over the life of the loan.
Pick the Mortgage that is Right for You
If you plan on staying in your home for more than seven years, a fixed-rate loan may be the best fit. A fixed-rate loan will ensure security and you will always know how much you owe. In these turbulent times, the majority of homeowners choose a 15 or 30-year fixed rate loan to ensure their financial future.
For those who know they don't want to stay in a locked rate, an adjustable rate mortgage is the ideal option. The ARM is good for those who move often or unsure of what their work or family situation will bring them in the near future. Typically, financially savvy investors use an ARM to get the best rate and lowest payment.
Not-so-Perfect Credit? Don't Worry.
Just because you have less-than-perfect credit doesn't mean you're ineligible for a home loan. Credit is just one of the criteria that banks and lenders use to evaluate your financial situation. Lenders also look at your assets, your income, and the property you're looking to refinance. As long as you have a score of at least 620, there will be a few home loan options available for you.
Improve Your Credit Score
Have a low credit score? Don't worry; there are a number of services that you can use to help boost your score. As always, the more you are able to improve your credit score the more home loan options will become available. A stronger credit score will give you more flexibility in getting the mortgage with that low monthly payment you want. As finance expert and President of Quicken Loans Jay Farner says, "With good credit comes the power to choose."
If you are considering purchasing your first home, do your own research. Speak with friends and family about their experiences when buying their first home. Then speak with a trusted mortgage professional. They can answer any questions you have and help you obtain a loan that's right for you.