You dreamt it, you planned it, you worked hard for it and now, finally, you are ready to buy the house of your dreams. It is a fascinating phase of one’s life indeed to be able to purchase his first house. It can also feel terrifying since you don’t want to make any mistakes. You know in yourself that you are making a long-term commitment by purchasing a house on mortgage. It is why you need to be cautious in making your decisions.
You might be ready to go shopping for a house, and you might have enough for the down payment already, but you also need to consider many other things such as which mortgage lenders Houston will you choose, what type of loan is best and what interest rate is convenient. But don’t worry, because every homeowner went through the same phase as you are, what you need to do is prepare yourself and equip yourself with as much information as possible in order guarantee the success of your purchase as well as the repayment afterward.
One of the most important things you need to consider is the type of loan, type of interest and terms of the loan. Here are some basics you must know about.
There are primarily two types of rate you need to choose from; we have the fixed rate, and then we have the adjustable rate.
Let’s go to the fixed rate first. Fixed, as the term implies mean that the interest rate is set uniformly during the entire duration of your loan. It is the same for your monthly payment. It ensures that you will never have to worry about any changes during the whole period of your investment. All you have to do is provide you can meet your payments monthly.
On the other hand, the adjustable rate may change the interest every few years or so. The price could go down, or it could go up and so are your payments. If you are willing to take a risk in the hope that you can get a lower interest rate in the coming years, then you can choose this type of interest rate.
Furthermore, you can also choose between a conventional mortgage loan and a government-insured loan. It is easier to get approved on a traditional mortgage as compared to the government-insured one. However, the government insured loans are far better and more advantageous than the first mentioned. Here are two of the most common kinds of government loans.
The Department of Veterans Affairs guarantees the VA loan. If you are military personnel or a family member, then you are entitled to apply and get qualified for the VA loan. The good thing about it is that you can get very low down payment at three percent or no down payment. In case of the loan defaults, the government will take charge of paying the lender all their losses.
The Federal Housing Association (FHA) loan is also a common type of loan, under the Department of Housing and Urban Development (HUD). It offers low down payment, low-interest rates as well as tax credits but it is difficult to qualify as compared to conventional loans.
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