As we discussed in our first blog post this month, interest rates are at record lows. Not only does it give consumers a lot of choices as far as managing their finances, but it also is great for home buyers, especially first time home buyers. If you fall into that category, here are a few things to keep in mind:
- How much loan/home you can afford- this is based on a few factors: the length and interest rate of the loan, what you’re planning to borrow and all of the upfront costs (appraisal, county recording, and initial escrow payment).
- The terms of your mortgage- most mortgage terms are 10-30 years in length, and how long you intend on living in the home provides different loan options.
- Considerations for better credit- if you have a credit score that isn’t exactly outstanding, you aren’t sunk. Just pay down debt balances regularly and establish a couple of months of good transaction history. The Iowa Finance Authority and FHA programs can also help you out if your credit is less than stellar.
- Get down with your down payment- certain loans and programs have limits as to the size of down payment required. For example, FHA loans require as little as 3-3.5 percent down, while VA and rural development loans may require no down payment. HOWEVER, if you are able to make a 20 percent or higher down payment, you will be able to avoid paying for…
- Private Mortgage Insurance- this is required for loans that are 80 percent or higher of the total value of the home. So, not only are you paying the mortgage on your home, you also have a monthly payment for your PMI.
- Always be closing- it’s important to keep in mind that closing on a mortgage can take up to 60 days. How can you expedite the process? Have pay stubs, tax returns and bank statements ready to go.
We know the home buying process can be intimidating and a little scary, especially for first time buyers. If you find yourself needing a helping hand, Security State Bank is ready and willing to assist. Just give any of our branches a call and we’ll help in any way possible!