Best 10 Home Owner Loans Compared for 2020

Buying your first home will almost always be overwhelming. It is as exciting as it is confusing and nerve wrecking, especially if you don’t have enough savings to make cash purchase and have to rely on loans. And while the banking industry if rife with lenders and financial service providers that are willing to grant you a first time home buyer loan, identifying a lender with the most favorable terms like low interest rates and down payments can be an uphill task

Nevertheless, we encourage that you take your time going through the different loan options available to you, and understanding the property market as this can help you save significantly. And it starts with understanding the different types of loans available to first time buyers and the minimum qualifications required.

In this guide, we compare some of the best commercial loans and mortgages for first time home buyers and their alternatives. But first, we look at why you should consider taking up a home buyer loan.

Why should you take a home buyer loan?

I. Speeds up the process of home ownership

A loan for the first time home buyer goes a long way in speeding up your home ownership. The low minimum deposit required to qualify for the loan is particularly handy as it ensures that you don’t spend years on your savings.

II. Some don’t require a loan down payment

There are special loan types that don’t require a loan down payment. These include special loan programs designed to help such special groups of individuals like veterans who benefit from VA loans that either don’t need significant down payments or don’t need one at all.

III. Low interests and monthly installments

The repayment of most home loans is spread over long periods of time – as much as 30 years. And this effectively brings down the loan amounts due per month to affordable levels. This is unlike personal loans that have shorter repayment periods and high interest rates that translate to higher monthly installments.

IV. Access to discounts and better rates

Most banks tend to offer discounted rates and fees to their customers. You can also benefit from better rates despite having a bad credit score. Some lenders use alternative credit data to approve borrowers. Others also offer lower rates for agency-backed loans and down payment assistance programs.

What are the pros and cons of the different first time home-buyer loans?

Criteria used to rank the best first time home-buyer loans:

• Type of loans offered
• Qualification requirements
• Customer support
• Amount/percentage of down payment required
• Interest rates
• Maximum loan amounts
• Availability – nationally or state-based

Best first time home-buyer loans 2024: Summary

Best first time home-buyer loans 2024

 

Things to consider when choosing home buyer loan

I. Credit score and history

Most lenders look closely at the borrower’s credit score and financial history when making a loan judgment. Your credit score also impacts the interest rates you will attract. It is therefore important to ensure all entries in your credit report are accurate. You can also work on improving your credit score as you eye qualifying for better home buyer loans.

II. First time home buyer programs

When shopping for mortgage lenders, look specifically for first time home buyer programs. Some lenders have partnerships with state agencies to offer educational resources, down payment assistance and discounted rates to first-time buyers. There are different programs for veterans, those with student loans and public servant. You can also combine these benefits to get a more affordable solution to buying your first home.

III. Government-backed home loans

Besides state agencies, government departments also offer first time home buyer loans. Some examples include the USDA (US Department of Agriculture), VA (US Department of Veterans Affairs) and FHA (Federal Housing Administration). These agencies offer relaxed restrictions on income, down payment requirements and credit score to allow easier qualification.

IV. Interest rate and other fees

It is very important to compare the annual percentage rate to determine how much you will end up paying for the loan. You should also review other costs including loan application, appraisal, origination and title fees. These factors affect the closing cost and vary greatly from one lender to another. Read through all the details and make sure you get clarification on all areas of the agreement.

V. Pre-approval

Pre-approval is one of the easy ways to determine how much you will be required to pay for a mortgage. When you get pre-approved, it also sends a message to sellers that they can accept and rely on your offer. Lenders have varying pre-approval options. Some allow you to upload documents and complete the loan application online. Others require a phone call or a visit to their physical premises. Simply compare your options and get preapproved for the loans you wish to borrow.

Alternative to commercial mortgages for first time home buyers

Bottom line

Ensure that you exhaustively compare all existing options before making a commitment. Read through the loan’s fine print to understand your responsibilities and expectations from the lender.There are numerous programs, grants, and loans available for first time home buyers. You can start by comparing the offers available in your town to find the best loans and rates. It is also recommendable to work on your eligibility and creditworthiness before applying for a home buyer loan. Besides improving your likelihood of qualifying, it will also help you attract better interest rates and offers. More importantly, look up customer reviews to gather insights about general concerns and their quality of service.

Glossary of Loan Terms

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