First Home Buyer Loan All you need to know

The first home buyer loan has made it possible for more people to buy their homes. First home buyer loan has many benefits, especially for people who have never purchased homes before. The first home buyer loan could allow you to get the house of your dreams without breaking the bank or resorting to high-interest payday loans or credit cards that charge exorbitant interest rates and fees. If you want to learn more about the first home buyer loan, keep reading this article to determine how they work and if they’re right for you.

What Is a First Home Buyer Loan?

The first home buyer loan is a specific type of loan designed for potential buyers who want to purchase their first home. It’s sometimes referred to as a starter home loan, an FHB loan or simply an FHL, but whatever you call it, there are several things you should know before you take out one of these loans.

What Types of Loans Are Available?

Fixed-Rate Home Loans

Fixed rate home loans can be a good option for people concerned about interest rates and who want to secure an interest rate over a set period. Fixed-rate loans often require you to pay off your loan in less than 15 years, however, which means you’ll have smaller monthly payments but pay more total interest fees. If you want flexibility in setting your payment schedule and you’re planning on staying in your home for longer than 15 years, then choosing a fixed-rate loan may not be ideal.

Adjustable-Rate Home Loans

 An adjustable-rate mortgage has a low introductory fixed interest rate but can have higher interest rates as well as increases to your monthly payments later on down the road. If you expect you will not be living in your home for at least five years, an adjustable-rate mortgage could be a good option. However, keep in mind that many factors can cause changes to your monthly payment, and lenders rarely offer more than two or three different types of interest rates on anyone adjustable-rate mortgage product.

first home buyer loan
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Split Home Loans

Your deposit is used as part of your loan amount, and you are required to make ongoing interest-only payments for up to two years. At that time, you can start paying down your principal or keep making interest-only payments. The second option comes with a slightly higher interest rate.

Interest-Only Home Loans

Interest-only home loans don’t require you to make any principal payments for five years. And, interest rates are a little higher than those for conventional mortgages, which are necessary to make monthly payments. The interest-only loan has another significant advantage over traditional mortgages: No tax deduction for PMI (private mortgage insurance). PMI is extra insurance that protects lenders if homeowners can’t make their mortgage payments. Borrowers usually get a tax break for paying private mortgage insurance when a conventional mortgage is used. Interest-only loans do not qualify; therefore, there is no need to pay PMI.

Concluding

As you can see, it is possible to receive an affordable first home buyer loan today. Numerous government-backed programs can make purchasing your first home much easier on your budget. If you are looking for more information, be sure to talk with a professional lender who can go over all of your options in detail. Make sure you ask any questions to feel completely comfortable before making a decision. With careful planning and assistance from qualified professionals, buying your first home doesn’t have to be complicated or scary; it should be fun!