Buying your first home can be an exciting and rewarding experience. Homeownership can also prove very beneficial for your financial future. However, before you can begin enjoying all the benefits that owning your own home has to offer, you will first need to tackle the task of securing a home loan. When shopping around for your first home loan, there are a few factors that you will want to keep in mind. You can learn more about each of these three factors below.
#1: Insurance Requirements
Most mortgage lenders will require you to purchase homeowners insurance when obtaining a home loan. This requirement exists regardless of whether you are a first-time home buyer or are buying your hundredth home. However, some lenders will require you to purchase additional mortgage insurance if you are a first-time home buyer or if you are considered a high-risk borrower. This requirement can increase your monthly expenses once you have completed the purchase of your new home. Consequently, you will always want to consider what insurance coverage you will be required to carry if you choose to borrow from a specific lender.
#2: Required Downpayment
There are several factors that can influence how much you are required to put down when purchasing a home. For instance, the more expensive the home that you want to buy is, the more money you will need to put down before your lender will pay the remaining balance. However, the type of home loan you choose can also have an impact on your required downpayment. For example, if you choose an FHA home loan, you will find that these loans require a smaller percentage down than a conventional home loan. Each lender may also have varying requirements regarding downpayment. Assuming you have a limited amount of money that can be used as a downpayment, you will find that this is a very important factor to keep in mind when shopping for a home loan.
#3: Eligibility For First-Time Home Buyer's Assistance
If you are planning to utilize a first-time home buyers assistance program, you will want to make sure that you are choosing a home loan that works with the assistance program you will be participating in. In many cases, this will mean steering clear of conventional home loans since these loans often prohibit gift contributions from anyone other than your spouse and other immediate family members. When shopping for a home loan, be sure to inform lenders about your intention to participate in an assistance program so that they can ensure you are applying for the right type of mortgage loan for your needs.
For more information about home mortgage loans, contact a local company.