What is the best type of mortgage to try to obtain for first time home buyers when buying a home in todays market?
There are so many different " first-time buyer" programs out there that it would be next to impossible to say which is best. Beyond that, however, here are a few very important things to keep in mind:
See a mortgage consultant BEFORE you go shopping for a home. Having a pre-approval in hand will give you a great deal more credibility when dealing with real estate agents.
When you have your mortgage consultation, be frank about what range of total housing payment you feel comfortable with. Even if you might be able to get approved for a payment that eats up 40 or 50% of your gross monthly income, think about how you your lifestyle would have to change if your disposable income went down by a significant amount. Be sure to take into consideration the fact that your budget will have to include a number of things that you didn't have to pay for when you were renting. Lots of people are now paying the piper because they didn't do just that. Just because you qualify for a $250,000 loan doesn't necessarily mean that getting it is a good idea.
Be realistic and honest with yourself about your current and future needs and upcoming life events. Those factors are different for everyone and mortgages aren't "one size fits all." By working with an experienced and knowledgeable mortgage professional, you will be able to tailor a solution that fits your individual needs.
When shopping for your loan, find a mortgage professional you feel comfortable with and whose questions demonstrate that they have your best interests at the forefront. Your experience will be a much more rewarding one.
Take a look at some of the other questions I've answered and that the other contributors on this wiki have answered. There are quite a few -- going through them just may answer some other questions you might have or make you think of new questions to ask. By getting as much information as you can the more able you will be to make an informed decision about buying your new home.
It can be an intimidating step if you are preparing for your home mortgage for the first time. The best suggestion for a first timer is to prepare! Prepare well in advance of applying for it. If you are considering buying a home, you need to prepare your financials asap. Build some savings and pay off your debts. If these things are something you wait on, you might not get approved for your home.
Only borrow the money you need. The formulas used by the lender may not accurately reflect unexpected expenses that may come up in your real life. Think of how you spend money and what payment amount you feel comfortable with.
Do not take out new debt and pay off as much of your current debt as possible before applying for a mortgage loan. The lower your debt, the better your mortgage rate will be. If you have high debt, your loan application may be denied. Large debt loads are expensive as well, in terms of the higher interest rates it can bring.
Have your financial information with you when you visit a lender for the first time. If you do not have the necessary paperwork, the lender cannot get started. This paperwork includes W2s, paycheck stubs and bank statements. The lender is likely to want to look over all of those materials, so keeping it at hand will save you unneeded trips to the bank.
You won’t want to pay more than about 30% of the money you make on your mortgage. This will help insure that you do not run the risk of financial difficulties. When you keep payments manageable, you are able to keep your budgets in order.
If you want more information , Hypotec posts tips and updates on the housing market for new homeowners. Check it out Hypotec's Home Financing 101 blog here!
Best of luck.