Finding financing for your first property is pretty hard. Sure, there are tons of mortgages for first time home buyers being offered to the public, but you can’t just choose one that you like for now. You’d also have to consider future circumstances before you stick to one.
To help you choose a mortgage successfully, why not consider these suggestions from the following finance experts:
Walter Melanson, co-founder and lead analyst at Propertyguys.com, wants first time home buyers to seek the help of a mortgage broker.
He explains that going through the process of buying property for the first time is really overwhelming. Not only will you have to pick a property but you’d also have to find financing for it.
The confusion you may experience may be alleviated by consulting with a mortgage broker because they “often work with upwards of 30 lenders to help get you the best mortgage for your lifestyle,” Melanson claims.
He adds that every first time home buyer must be able to answer the following questions before they choose a mortgage:
- How much are your monthly expenses?
- For how long do you plan on paying the mortgage?
- Do you have income flexibility to survive any rate changes?
- Do you have a backup plan in case you lose your job or any similar circumstance occurs?
Robert McLister, a mortgage planner at intelliMortgage, says that most first time home buyers choose a 5-year fixed rate mortgage, because it guarantees a definite rate for a certain period regardless of current market conditions.
McLister also suggested that getting a shorter fixed-rate mortgage at variable rates may lead to better savings for first time home buyers who are financially stable, have great credit, and save at least 5% of their income each month.
Buyers can also get the best features of a fixed mortgage and a variable one through a hybrid.
Hybrid mortgages allow its owners to split their mortgage into 2 rates – this way you can take advantage of low rates and still protect your capacity to pay when rates increase.
If following the “tried and tested way” isn’t your thing you can also flip the way you look at mortgages to get the financing you need for your first home.
Rick Otton, an international property investor who conducts annual seminars in the UK, says that assuming responsibility for old loans can make it easier for first time buyers to buy a house, compared to going out and getting a brand new home loan. Then, after an agreed period, the buyer will refinance with the initial payments being the equivalent of the downpayment.
Essentially, this set up relieves the buyer of having to save all 10-20 per cant of deposit money right now, which can be a gargantuan task these days. Moreover, this set up can help buyers avoid settling for the 95-100 per cent home loans, which can be very risky if the housing market experiences another recession.
That’s the alternative way of doing things if the buyer is short on deposit money, according to Mr. Otton.
Whether you go for the alternative solution or a more traditional method will depend on your current needs. When looking into these options, my advice is always choose the one that best fits your financial situation.Tags: 5-year fixed rate mortgage, choose a mortgage, finding the right mortgage for first time home buyers, get the financing you need for your first home, mortgages for first time home buyers