Many streets are occupied by seasoned homeowners that settled into homeownership long ago. Until recently, first time homebuyers had a rough go of obtaining funding for their mortgage loan. These days, more moving vans are pulling into the driveway carrying the belongings of that recent college graduate or young couple just starting a family. Regardless of their position in life, more first time homebuyers have begun to take that leap into home ownership.
The turbulent economy has brought wrath on the housing market and personal wallets of many Americans. Foreclosures hit an all-time high a while back and property values began to suffer. More people were finding themselves overwhelmed by debt and seeking the debt relief protection bankruptcy can offer.
Homeownership Looking Good
After all of the ominous news about the economy, many potential homeowners were left feeling doubtful about their chance at successful home ownership. The good news is that recent reports point towards an increase in the number of first time homebuyers. In fact, the number of first time homebuyers has continued to increase for the tenth straight month. In June, an increase of nearly 24 percent was seen, hitting its highest since August of last year.
What is the reason? Many lenders are beginning to loosen up their lending qualifications and open doors to those who, a few years ago, would have been denied a loan at the door.
Sign On The Line
So what has really changed in the mortgage firstnewswallet lending industry? For starters, the minimum down payment requirement has been lowered. Most first time homebuyers lack the funds for a large down payment, which had previously flagged them as a risky borrower. Since the standards have been relaxed a bit, many first time homeowners that are otherwise qualified are getting a break in the down payment requirement.
In the past, many lender posed down payment requirements that were stricter than the minimum set by the government. With more lenders offering greater flexibility in lending, first time home buyers are finding it easier to get the chance of a lifetime. Even better is the fact that interest rates continue to hover near their lowest point in over 50 years. The reduction in home prices, low interest rates and lesser down payment requirements, have all contributed to the influx of first time home buyers.
Getting The Best Deal
The only downside to first time homeownership is the lack of knowledge about the process. Seasoned homeowners know how to shop around for the best loan and to review the fine print. With increases in new mortgage trends, first time home buyers may be unaware they aren’t getting a fair deal. The biggest mistake new home buyers make is failure to calculate their total monthly expenses associated with homeownership. First time home buyers should consider the following:
- Will there be an increase in the rate down the line?
- If so, how will this affect the monthly payment?
- Are there any additional costs associated with the loan? For example, mortgage insurance, fees for refinancing down the road etc.
- What are the exact terms and conditions of the loan? For example, the duration of the loan, payment intervals etc.
- What is the interest rate based on? For example, the national prime rate, subprime rate etc.