Advantages of being a First Time Home Buyer
Becoming a first time home buyer is a big decision, but being a homeowner comes with many advantages. A mortgage payment combined with property taxes and insurance is often the same or only slightly more than monthly rent. Instead of throwing away your rent money, you will be building equity with each payment. Additionally, your payments will be offset by tax savings from mortgage interest deductions, which constitute most of the payment in the early years of a mortgage. Finally, real estate has historically appreciated.
Challenges of being a First Time Home Buyer
One of the biggest hurdles in the first-time buyer’s purchase is producing cash for the down payment and buyer’s closing costs. But even this obstacle is not insurmountable. If you are a veteran, you may be able to obtain 100 percent financing through a VA loan and many lenders offer 95 percent financing. The FHA has programs for first time home buyers and have lower down payment requirements, usually 3.5%. If your income enables you to qualify for the necessary mortgage loan, you may be able to negotiate a contract in which the seller pays your purchase closing costs and adjusts the price upward so that you, in effect, finance your closing costs. But the loan appraisal will still need to support this higher value in order for the loan to close.
A good place to start the entire process is to visit a mortgage loan officer to “pre-qualify” and establish your maximum loan amount. Call one of our First Time Home Buyer Lenders today! This loan maximum, coupled with your available cash, will determine the price range in which you should look. You can begin shopping by communities you want and need, remembering that “location-location-location” can be as important as the home itself.
When shopping for a mortgage, look at the overall cost, not just the interest rate. Generally speaking, the higher the rate, the lower the number of points charged. Make sure you understand any hidden costs or special early payment penalties, which could create problems for you. Look at different mortgage products, such as shorter-term fixed-rate loans or adjustable rate loans, but be sure you understand what your “worst case scenario” is if interest rates rise.
First Time Home Buyer Real Estate Agent
Buying a home is usually an emotional decision, and you need the counsel of a reputable, knowledgeable Detroit Lakes first time home buyer agent who can help you buy wisely. As a first-time buyer, professional real estate assistance can be crucial. You should insist that the agent work with you as a “buyer’s agent” to be your advocate in the transaction.