When one is buying a new house for the first time, it is necessary to know what loan options you have, laid out in front of you. One must think of a lot of things before signing that dotted line and locking yourself into a mortgage payment for the next 30 years. What would be the best loan to choose in one's given situation? Can the debt burden be managed? Will the bank allow one to make a very low down payment, one that is affordable? What are the things that I should give a lot of thought to before I make a move?
Down payment
Normally, down payments are required to ensure that the lending institution recovers at least part of the balance of the initial loan, in the event that a borrower doesn't meet his or her legal obligations with regards to the loan agreement. Sometimes, people who who are looking at loans might have to offer or show possession of collateral (properties or other investments, for example) just to assure their loan officer that they will be able and will pay back their loans.
If you are worried about how big your estimated down payment will be, then don't be. There are many banks that will allow us to pay a very low down payment in exchange for a first time home buyer loan. Banks can offer down payments of as low as 3.5%. Low down payments can be beneficial to you. With a down payment this low, you can still maintain a level of savings for other expenditures.
Interest Rates
Like every other debt, loans are also charged with interest according to the agreed upon annual percentage rate.
When looking into taking out a loan, one can also consider the possibility of applying for a subsidized one. This can be very beneficial, as a subsidized loan basically means that your interest cost is being paid by another party; be it government or charitable institutions.
But, in order to obtain this, one needs to meet certain qualifications. Some people who have been granted with subsidized loans qualify according based on the property they choose or their gross annual income.
Deferments
It is always a possibility that, at some point in time, we might not be able to pay back our loans because of some issue or unforeseen incident that we couldn't predict. When one is in this situation, he or she can ask the mortgage loan officer to grant a deferment.
Deferments are a privilege that the bank gives you if you have met their criteria for eligibility. This means that a debtor can given a break from paying his or her loan, and resume paying when the period given for the deferment has expired.
There are many types of deferments. Some of them even stop the monthly interest of the loan from accruing, others just reduce the mortgage payment for a time. It all depends on the bank you have taken the loan out with, and the requirements of the loan agreement you have.
If you are going to buy your own home for the very first time, think about the things mentioned above. It is always advisable that one knows what he or she is getting into before entering into any legally-binding transactions. Loans are no exception.
Author Resource:
Oliver Silverstones makes it easy for the first time buyer to find all the state and local first time buyer programs. He keeps a daily update of the lowest mortgage rates today , as well as providing great advice to avoid most first home buyer headaches.
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