Top Mortgage Tips for First-Time Home Buyers

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Despite the amount of time that has passed since the burst of the housing bubble, the U.S. economy is still reeling from the mortgage crisis. And despite a number of reforms that have been put in place, many first-time home buyers are skeptical of the real estate market.
But while there’s good reason for people to be cautious when considering taking that first step towards home-ownership, there’s no need to be reticent. That’s because it is still possible to find attractive deals on home loans. The trick lies in first-time buyers finding an affordable mortgage rate.
Securing home financing is the largest undertaking many people experience in life, which is why it’s vitally important to sure the rates are affordable and tenable in the long term. Of course the detailed and — oftentimes — convoluted process lending institutions employ for determining how much money a person qualifies for can make a first-time buyer’s head spin. That’s why it’s important for all new buyers to do their homework and know their facts before signing on that dotted line.

Know your financing
Just like college loans, mortgage financing come in all shapes and sizes. For example, it’s of paramount importance that all first-time buyers understand whether they should opt for a conventional mortgage or government loans from the Veteran’s Administration or the Federal Housing Authority. Of course there are various and different advantages for each type of financing. VA loans are very attractive in that they allow a 0% down payment. Of course the catch is the applicant must have served in the military in the past. 
FHA loans, on the other hand, are more flexible and allow for a 3.5% down payment. The FHA is also flexible when it comes to credit ratings. The FHA has a history of leniency when it comes to offering mortgages to those who have had some credit troubles in the past. Conventional mortgages, on the other hand, are not so pliable. When it comes to conventional mortgage financing, typically a 5% down payment is required as is an impeccable credit score.
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Analyze your debt to income ratio
The key to figuring out just how much house a person can afford to buy lies in the debt to income ratio. The process of calculating an accurate debt/income ration starts with looking at monthly gross income — or how much a person takes home before taxes. Lenders than calculate a payment figure the buyer can reasonably afford based on a percentage of this gross income. Lenders then take all of the buyer’s current debt into account in order to calculate a complete mortgage payment figure. The goal of the buyer is to keep their gross income high and their debts low in order to ensure lower payments.
Consider various payment plans
Everyone would like to pay less interest on a home loan. What many don’t know is that there are plenty of ways to do it. For example, many lenders offer bi-weekly payment plans for those who have the means to pay half their mortgage twice weekly rather than the full amount once a month. What this does is allow the buyer to not only reduce the principal balance of their loan more quickly, but reduce future interest calculations as well.
These are just a few things for those new to the world of homeownership should bear in mind when considering financing. Above all else it is important for the buyer to feel comfortable with their lender. Loan fraud is still a very real problem, despite the safeguards that have been put in place since the burst of the housing bubble. To avoid these pitfalls, the buyer should make sure the process is a pleasant one and everything is above board.
Author Bio:
Zane Rosenbloom lives in sunny Arizona, where he is always looking for lower Arizona mortgage rates He is an independent writer for Eddie Mortgage. Zane knows where to find the best Arizona mortgage resources.

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4 Comments

  1. Michael
    October 31, 2013
    • efoghorjos
      November 6, 2013
  2. gerald bouthner
    March 10, 2014

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