If you’re a First Time Homebuyer, Here are Things to Learn NOW

Are You a First Time Homebuyer?

If so, congratulations? You’ve come to the right place. The Home Loan Expert team closes more loans than anyone in the Midwest, so we can definitely get you moved in.

 

There are a few things that you should know going in, though, that will help inform just HOW you buy your home. Don’t worry, we can get you there no matter how you want, and will give you the options on what will save you the most money. You deserve to know all of the different ways we can get you moved in.

 

Conventional Mortgages

Mortgages come in two basic flavors in terms of rate – fixed-rate or adjustable rate. We HIGHLY recommend fixed-rate, especially with the rates so low right now. An adjustable-rate mortgage can only go up from here, really. Why would you want to gamble on a nearly impossible further drop against a nearly guaranteed rise?

 

What I’m saying is, lock in now at a fixed rate.

 

Conventional fixed-Rate mortgages come in both 15-year and 30-year varieties. What you get is a fixed interest rate for the life of the loan. This is for people who like to make a single payment, every month, for the life of their loan. Your monthly payment won’t fluctuate up or down dependent on the market.

 

A fixed rate mortgage is a no-brainer right now. Some borrowers have gotten rates in the 2’s. Most are in the 3’s. That’s unheard of. 10 years ago, rates were at 6%. 6%! If you get an adjustable rate mortgage, that’s what you’ll end up paying, unless you wait until rates get this low again and refinance to a lower rate. With rates this low, fixed-rate is the best option.

 

You can also get either a 15-year or a 30-year mortgage. The differences here should be apparent. A 15-year will often have a lower rate than a 30, but the payments will be higher, since you’re making less payments. You’ll pay less overall, though. If you are worried about making the monthly payments on a 15, but want to pay off your loan earlier, you can always get a 30 and make extra payments. Just make sure that your mortgage doesn’t have penalties for early payments.

 

 FHA vs Conventional

As a first-time homebuyer, you should know about FHA. An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). FHA loans are perfect for first-time home buyers. It only requires a 3.5% down payment, and is usually attached to a 30-year fixed mortgage.

 

An FHA Loan really helps put people in homes. They let people who may be struggling to save for a large down payment due to high rent costs or other factors buy their first home. Times are different now. It’s more difficult to save for a home, and people are staying in their homes longer. FHA has been a real boon to the housing industry.

 

There is a catch, however, in the form of Private Mortgage Insurance.

 

Private Mortgage Insurance is an additional fee added to the Home Loans. It doesn’t go towards paying off your loan; it actually just guarantees the loan for the lender. Since you aren’t putting the traditional 20% down, the bank needs assurances that you will pay off the loan. The PMI helps guarantee the loan like an insurance premium.

 

PMI is something that you just have to live with though. You used to be able to remove PMI after you pass the 20% barrier on your payments, but that ended. Now, the only way to remove PMI is to refinance your loan after you hit that 20% line. That’s worth it since PMI is really just money you’re paying out with no return anyway. So once you have 20% of your home value paid off, call us back and we’ll lock in another low rate for you.

 

Since nobody in the Midwest closes more FHA Loans than The Home Loan Expert team, we know what we’re talking about. Take advantage of lower mortgage rates to buy your first home. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?

[Source: http://thehomeloanexpert.com/blog/first-time-homebuyer-here-are-things-to-learn-now.html]