Undoubtedly it is not easy for first time home buyers given today’s economic conditions. With the advent of more stringent lending regulations, first time buyers are finding it increasingly difficult to find a lender to borrow from. Lending institutions are now demanding sizeable down payments and many first time buyers simply do not have the resources to make adequate down payments. Research shows that first time buyer numbers are at their lowest point in 25 years.
Lenders have responded to the first time buyer situation with a deluge of mortgage programs designed to make it easier for first time buyers to obtain a mortgage loan. The pool of lenders is ever increasing; with a wide variety of loan types available and the wide assortment of varying mortgage regulations among lenders it’s no wonder first timers are often confused.
The best place to start in understanding mortgaging is with the two major types of loans; fixed and variable rate. Fixed rate loans are characterized by a rate of interest that is fixed and cannot be changed during the term of the loan. Variable rate loans are characterized by interest rates that can vary during the life of the loan. The recession has caused interest rates to dive and thus, variable rate mortgage borrowers are benefitting with the lowest interest rates seen in years.
For most first time buyers coming up with the required down payment money is the most difficult part of procuring a mortgage. Previous to the economic crash, many lenders were waiving down payment requirements and even granting mortgages in excess of 100% of the appraised value of the property. Today there will be a down payment requirement and it will likely be 20-25% of the value of the loan.
First time buyers should fully expect to be carefully screened; credit rating, income, financial stability and other factors are sure to be scrutinized before a mortgage will be awarded.
When shopping for a mortgage all borrowers should look at numerous lender options and carefully evaluate what each has to offer. After reviewing various lenders and their programs, then make a decision based on which mortgage provider can best meet your needs. Independent mortgage advisors are a great resource for expert insight into lenders and their mortgage loan programs. Independent mortgage advisors often have inside knowledge pertaining to mortgage lenders and their practices; pay heed to any advice they have to guide you in your mortgage quest.