subject: Advice for First Time Buyers [print this page] Advice for First Time Buyers
It is obvious in today's market, with the banking and economic climate what they are, that getting into the door of real estate has never been more difficult, especially if you are a first time home buyer. The reluctance of banks and mortgage companies to lend money, along with the major deposit they would expect if it was approved, is making it very hard for people to purchase a first home. All of that, along with the inflated property values in some areas, make the rental market an attractive option.
Research indicates that the amount of first time home buyers is at its lowest point in 25 years. What is the best type of advice that a first time buyer can get if they are not looking to rent? Despite recent legislation, there are many mortgage products and plans available through a large lender pool. However, it can be confusing and difficult to find a product or plan that works for you.
The first step should be to understand the plan options, such as fixed or variable rate plans. A fixed rate loan is set at a certain interest rate in the beginning and does not change over the course of the loan. A variable rate loan will fluctuate quite a few times over the course of the loan's life. Interest rates are rather low at this point so anyone who already has a mortgage and chose the variable rate is enjoying some of the lowest payments they have probably ever had.
For many people, the most difficult part is coming up with the deposit. In general, that amount could be 10% of the loan amount, but it's not uncommon for a lender to request much more. A lender will take everything into account, from your credit history to your salary, IRA, dividends, etc. It is not a great idea to just look into one mortgage lender, as there are dozens to choose from. A little comparison shopping can save you hundreds of dollars every month.
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