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Jun 27

Fixed Rate Mortgage Details for First Time Homebuyers

If you are a first time buyer there are many things that you need to look into before you secure a fixed interest rate mortgage to pay for your new residence. Some of the things you look into are going to depend on what you can afford to pay both as a down payment and as monthly payment. One thing that people often forget to factor into their monthly mortgage payments is the fact that interest is included, which can get very tricky to calculate if you do not choose a fixed interest rate mortgage.

Couple getting mortgage advice from an expertThis is why many first time buyers who like the idea of sticking to a strict budget like the idea of a fixed rate mortgage since they know their monthly payments will remain the same no matter how the housing market is performing. The other advantage is that sometimes while you may be overpaying, when the market is high your interest rate cannot be increased thus protecting you and keeping your home affordable while at the same time saving you money in the first place.

Another advantage of a fixed interest rate mortgage is that when you choose this option you can usually opt for a lower down payment which is what may first time buyers need in order to get their feet wet. What you end up paying for your mortgage will depend on your credit ranking and the amount of the purchase you choose to make. For example, jumbo mortgage rates are usually about .5% higher than any other confirming fixed interest rate mortgage because they are a higher risk for lenders and also require a higher down payment. So the size of the mortgage you hope to secure is going to play a fundamental part in the interest rate you pay.

While paying a higher down payment can also help drive down the costs of a high fixed rate loan, especially in cases where self-employment may force you to take out a stated income mortgage or a no doc mortgage, you can take advantage of FHA mortgage lenders to secure a lower interest loan with a lower down payment as well. In fact, FHA mortgage lenders are also a great option for people who do not have perfect credit, because they receive government funding to back your loan guarantee.

In order to be eligible to work with FHA mortgage lenders you typically have to be looking at a responsible purchase, not a jumbo mortgage, with a fair credit score. You also have to be able to make at least a 3% down payment although in some severe cases there are options for a zero down payment and not have a foreclosure on your credit record in the last three years. There are different grades depending on your credit score and income so if you have any questions about how the federal program can help you your best option is to set up an appointment with FDA mortgage lenders.

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