| What You Should Know About Buying A First Home |
| Articles - Mortgage |
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One problem plaguing excited first time home buyers is the deposit for the house of their dreams. If you are one of them, this problem can be resolved with a little help from family or friends or the First Time Homebuyer Credit. But all these are just the beginning of your new life as a homeowner and your responsibilities is just starting.
One problem plaguing excited first time home buyers is the deposit for the house of their dreams. If you are one of them, this problem can be resolved with a little help from family or friends or the First Time Homebuyer Credit. But all these are just the beginning of your new life as a homeowner and your responsibilities is just starting. First time home buyers may qualify for government insured loan programs which may waive or reduce the required down payment. Since the government wants to encourage home ownership, their credit score requirements may not be as strict as those of banks and mortgage companies. You still may qualify for a lower interest rate. Try to find a mortgage payment that won't strain your budget. Paying a mortgage is an investment in your future, paying rent is not. Calculate how much you can comfortably afford to spend on your mortgage each month. Deduct your down payment from the amount of the purchase price of the home and determine whether the payments on the home you are considering will be manageable. You need to set a strict limit and stick to it, no matter how tempting it may be to spend more. Tell your realtor your top price and advise him you don't want to look at homes that cost more. Realtors make money on commissions and the more expensive the house they sell, the high their commission. Don't let your realtor talk you into a house you can't afford. Young newly-weds are always excited at the prospect of owning a house that they jump into a deal without examining what goes with the mortgage. They take the first offer that looks good on paper without knowing that there are fees and more fees attached to the deal. Take a look at the required deposit and the disadvantages of having insufficient funds for the deposit. If you do not have the amount, the lender will slap on the insurance fee on the mortgage, increasing the mortgage amount by as much as $20,000. A no deposit mortgage may be tempting for professionals who can service the mortgage but cannot save for a deposit. Take note that these no-deposit loans have more requirements and there are still the standard fees to pay. There is the closing fee that can be quite stiff for couples who are buying a house on shoestring budget. Add all these fees to the actual mortgage price and you get the picture. If the cost of the entire mortgage is beyond your humble budget, look for a cheaper home and shop for other lenders who can offer affordable fees and a lower interest rate. Always negotiate for lower closing costs; lenders are willing to listen and give you a discounted closing fee. So how do you compare lenders? Check out the APR or Annual Percentage Rate which will reflect the total cost of the loan and calculate the Annual Percentage Yield which will show how the compounding interest makes the loan worth the trouble. Ask the lender to disclose both APR and APY. They are bound by law to give this information. After you have done your own personal financial analysis and decided how much you can afford to spend on a house, it is time to start looking around. Don't put in an offer on the first house you see, check several properties before you make a decision. Chances are you'll be living there a long time. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. If you are looking for more advice about East Lansing mortgage, you should check out this site which has great info about Lansing mortgage company. |