Often, first time home buyers don't have the resources to get a regular mortgage, which is why there are first time buyer mortgages. If you are a first time buyer, you may be confused because there is more than one type of first time buyer offers out there, and it is important to choose the one that is going to help you out the most.
One thing that many first time buyers get offered to them is the opportunity to pay a lower down payment on their new house. Most first time buyers just don't have the required 20% of the purchase price of the home saved up. Some banks are allowing their first time buyers to put down just 5% or 10% of the price before they move in.
Whether or not taking the bank up on this type of offer is a good idea is going to depend on several things. It is going to get you into your house a lot sooner, so you won't have to save for a long time. This convenience comes with a price because most banks will make you carry a private mortgage insurance to reduce the risk. That means that instead of putting more of your payment to your actual loan, some of it is going towards this insurance. Plus, having a reduced down payment might lead you to believe that you can afford a more expensive house than you really can. This could spell trouble in the future.
Banks may even offer first time buyers the opportunity to have an introductory rate for a set period of time. This gives the first time buyer the opportunity to save their money for other things that come up during this introductory period. Often first time buyers find themselves facing a financial crisis when the introductory rates go away because they got used to the low rates.
The problem is that a lot of homeowners get so used to the reduced interest rates that they forget that the interest is going to go up in a fixed time period and they don't plan for this. When the mortgage rates go up, they find that their budget is seriously pinched. Sure, they may have had every intention of saving that money that they were saving on the interest for the future. You never save money, especially when you are buying your first home and have to buy furniture and redecorate it to your tastes.
Sometimes banks just offer first time buyers offers like no closing fees or gifts when you take out your first mortgage with their bank. They want your business and are going to offer first time buyers special services in order to gain their loyalty.
Not only do first time buyers have a lot of power when getting their first mortgage, they also have a lot of stress. Some banks will stress first time buyers out because they pressure them to take out a mortgage that is too expensive so that they can make more money. Remember to only get a mortgage that you are comfortable with.
One thing that many first time buyers get offered to them is the opportunity to pay a lower down payment on their new house. Most first time buyers just don't have the required 20% of the purchase price of the home saved up. Some banks are allowing their first time buyers to put down just 5% or 10% of the price before they move in.
Whether or not taking the bank up on this type of offer is a good idea is going to depend on several things. It is going to get you into your house a lot sooner, so you won't have to save for a long time. This convenience comes with a price because most banks will make you carry a private mortgage insurance to reduce the risk. That means that instead of putting more of your payment to your actual loan, some of it is going towards this insurance. Plus, having a reduced down payment might lead you to believe that you can afford a more expensive house than you really can. This could spell trouble in the future.
Banks may even offer first time buyers the opportunity to have an introductory rate for a set period of time. This gives the first time buyer the opportunity to save their money for other things that come up during this introductory period. Often first time buyers find themselves facing a financial crisis when the introductory rates go away because they got used to the low rates.
The problem is that a lot of homeowners get so used to the reduced interest rates that they forget that the interest is going to go up in a fixed time period and they don't plan for this. When the mortgage rates go up, they find that their budget is seriously pinched. Sure, they may have had every intention of saving that money that they were saving on the interest for the future. You never save money, especially when you are buying your first home and have to buy furniture and redecorate it to your tastes.
Sometimes banks just offer first time buyers offers like no closing fees or gifts when you take out your first mortgage with their bank. They want your business and are going to offer first time buyers special services in order to gain their loyalty.
Not only do first time buyers have a lot of power when getting their first mortgage, they also have a lot of stress. Some banks will stress first time buyers out because they pressure them to take out a mortgage that is too expensive so that they can make more money. Remember to only get a mortgage that you are comfortable with.
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