If you are planning to purchase your first home, you will also need to tackle the task of obtaining your first mortgage loan. In order to ensure you are getting the best home loan for your specific needs as a first-time home buyer, there are a few things that you will need to consider when evaluating each loan option. Continue reading below to learn more about these important factors.
Factor #1: Credit Requirements
Each mortgage lender will have its own set of credit requirements that you must meet in order to qualify for a home loan. The problem that many first-time home buyers encounter is that they do not have a mix of different types of credit accounts on their credit reports. Since many lenders look for applicants to have both credit card and installment loans on their credit reports, this can make it harder for first-time home buyers to qualify for the financing they require. Applying for loans that are specifically geared toward first-time home buyers can help you to find a loan that offers more lenient credit requirements.
Factor #2: Compatibility With Home Buyer Assistance Programs
It is quite common for first-time home buyers to take advantage of assistance and grant programs that provide funds for a down payment or help to cover closing costs. Unfortunately, not all mortgage loans will be compatible with this type of assistance. This is because many conventional mortgages will limit who is allowed to contribute to your upfront costs. If you are planning to take advantage of any type of assistance when buying your home, you will want to make sure you are choosing a home loan that is compatible with the assistance program you plan on using.
Factor #3: Additional Costs Associated With The Loan
In addition to the value of your loan and any interest charges, some home loans will also come with a variety of additional costs or fees. For example, first-time home buyers will often find that lenders require them to carry mortgage insurance regardless of how much money they put down on their homes. Some lenders will also require you to carry optional home insurance coverage, such as flood or earthquake insurance. All of these requirements can add to how much your home loan is really going to cost you. That is why it is so important to carefully consider all of the costs associated with a particular loan before determining if it is the right loan for you.
Contact your mortgage lender to learn more about home mortgage loans.
