Being a first time home buyer can be a complicated and stressful situation. One significant question that comes to mind when purchasing a home is, “where will I acquire the funds needed?” Therefore, our group will focus on where first time home buyers can look into in order to attain the finances when buying a house. We will also concentrate on the government assistance programs available for these individuals.
A first time home buyer needs to examine how much they can really afford before shopping for a home. A good indicator to how much you should look around for is either anything that is 35% of your monthly income or two and a half times your yearly income. Therefore, knowing how much you will be pre-approved for will also help you make a decision.
There are also various mortgages to consider. A fixed-rate mortgage allows for a person to pay the interest rate for the life of the loan that he/she signed at. An ARM (adjustable rate mortgage) is where the rates fluctuate. A hybrid mortgage has fixed rates for a period of time and then the rate adjusts for another period of time and an interest-only mortgage is where interest is paid first before the principle is paid off.
Overall, there are many crucial decisions to make, such as selecting the right mortgage and the amount to put down; therefore, looking into government assistance can be very beneficial. For example the Federal Housing Administration (FHA), this offers loans to those with average credit or little money for down payment. There is also the U.S. Department of Housing and Urban Development (HUD), which assist in down payments and closing costs.
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