What are some different home loan options for first-time buyers?


Homeownership is one of the dreams that young people are chasing after in life. However, for some, the dream is quickly becoming unattainable due to challenges when it comes to finding suitable financing.  Are you searching for a suitable mesa home loan to help you purchase your first home? In this article, we are going to see some of the different home loan options that first time homebuyers can choose from.

The Federal Housing Administration Home Loan

If you are locked out from home loans chandler because of poor credit score, FHA home loan will still help you to own a home. The FHA loan is a home buying mortgage that is issued by the lenders approved by the Federal Housing Administration. The mortgage type is specially designed for the low to moderate-income borrowers and does not require a higher minimum down payment. In addition, the FHA loan requires a lower minimum credit score compared to the various Arizona home-buying programs. 

As of 2019, FHA loans allow homebuyers to borrow up to 96.5% of the total value of their home with the FHA loan. In addition, even those with a credit score of 580 can still borrow FHA financing to purchase a home. If the borrower is able to pay 10% down payment, FHA loans will be available if you have a credit score of 500 to 579. 

Note that the FHA does not actually lend you money. However, you get the mortgage from the FHA approved lenders, which includes the banking institutions or even the different Arizona home buying programs. 

The VA Loans

For those who currently or previously served in the military, The VA loans will help you purchase the dream home. The VA loans play an important role in helping aspiring homebuyers achieve the dream. The VA loan was first established by the United States Department of Veteran Affairs assisting veterans and eligible surviving spouses to become property owners. The determination of whether one qualifies for the VA loan is dependent on the standards that are pre-determined by the veteran affairs office. Like FHA loans, the private lenders or the mortgage lenders like Arizona home buying programs, as approved by the Veteran Affairs office, provide the VA loans. The VA loan caters for 100% financing. Therefore, the borrower will not have to provide a down payment. In addition, there is no private mortgage insurance premium required by the lender. In order to fast track the approval of a VA loan, the qualified borrowers can seek assistance from the VA office. 

The Adjustable-Rate Mortgage

Just as the name depicts, this is a mortgage type where the interest rate that is applied to the outstanding balance varies throughout the life of the mortgage. Normally, the interest charged on adjustable-rate mortgage resets periodically. This could be yearly or even monthly, in relation to the benchmark or index, plus an additional Adjustable Rate Mortgage margin. The index is usually a measure of the interest rate while the margin refers to the extra amount that the lender will add. 

Mortgage lenders normally charge a lower initial interest rate for ARMs compared to what is charged on the fixed-rate mortgages. The adjustment period and rate should be agreed upon before the lender agrees to loan the borrower. 

The Fixed Rate mortgage

This is the simplest financing option when it comes to seeking a home buying mortgage. The fixed-rate mortgage will have a fixed interest rate for the entire life of the loan. Therefore, regardless of the length of the period that the loan will last, the interest rate remains the same. For homebuyers, whether first time or repeat, the fixed-rate mortgage is a very popular choice. This is attributed to the fact that the principal amount and the interest remains the same, making it ideal for the borrower who does not wish to apply for the ARM. 

The interest rate on the true fixed mortgage is usually dependent on the available rates at the time of signing the application. To calculate the interest rate, the lender will also take into consideration the borrower’s credit score. Ensure that you understand the additional costs that are factored by the lender when calculating the fixed interest rate.

Taking the ST George home loan on fixed interest rate terms can be suitable for some borrowers compared to the others. Generally, this is the best choice for families planning to live in the same home for several years. Before applying for the fixed interest rate mortgage, ensure that the interest rates are not so high.  

Those are the different home financing options available for first-time buyers and repeat buyers. Before choosing the appropriate loan product, ensure that you have done a proper background check to ascertain it is favorable. This is in terms of repayment terms and the amount that the lender is offering. 

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