A First Home Buyer’s Guide to Mortgages

Buying your first home is an exciting time. According to BankRate, in 2023, 32% of homebuyers bought a home for the first time, with a lot being first time home buyers. Most buyers will wind up with a mortgage. If you’ve never had a mortgage before, this guide is what you’ve been looking for. We’ll explain everything you need to know as a first time home buyer.

Down Payment

Although you may get a loan from the bank or mortgage, you’ll also need a down payment. The down payment is determined using several factors. A bank will look at your credit score which can quickly help you decide your down payment. They’ll also ask how much you want to put down for a down payment. Many homeowners put down significantly more than the minimum required to enjoy lower monthly payments.

Different Terms

There are various types of mortgages available if you’re a first time home buyer. The term is the length of time it’ll take you to repay the loan. One of the most common programs is 30-year mortgages. A 30-year mortgage often has lower payments because they are spread out over time. However, you may wind up with a fluctuating interest rate or balloon payment at the end. Make sure you carefully weigh the pros of the term to make the best decision for your family.

Financial Health

Most people love the idea of purchasing a home because a mortgage payment is often cheaper than a rental payment every month. However, it’s important to make sure you’re financially healthy. You’re responsible for the cost if something goes wrong with the house. You’ll also have to pay for other expenses like homeowner’s insurance. Speak with a professional to make sure you fully understand the total cost of purchasing a house, both short and long-term, to ensure you can afford it. You want to make sure you don’t wind up losing your house.

A first time home buyer has several criteria to meet to be approved for a loan. Mortgage lenders will look at your credit score, debt-to-income ratio, yearly or monthly income, and more to ensure you can afford your mortgage. If you are looking to get started with our services, contact Renaissance Community Loan Fund today. We’ll happily explain the process to you!