For most people, a home is the biggest purchase they’ll ever make. A mortgage loan is often necessary to complete the transaction. Choosing the right lending option is important, as it could save you money over the long term. If you’re going through the process of becoming a homeowner for the first time, here’s what you need to know to select the mortgage that best meets your unique needs.
What to Consider Before Applying for a Mortgage Loan
Before you start shopping for a mortgage loan, you must consider your financial status and lifestyle. This will help identify the terms you should look for. Here is what you should factor into your decision:
Down Payment: The amount you have saved for your down payment will affect the types of loans you’re eligible for. Though the standard down payment required for a conventional loan is 20%, there are other options that will allow you to put down significantly less.
Credit Score: Your credit score will also heavily influence what loans are available to you. Conventional loans will typically accept an average credit rating but require borrowers to pay a higher interest rate, while others are more forgiving.
Life Plans: Depending on your career or life events, you may plan to move within the next few years or settle into your home for decades. This will impact the terms of the mortgage loan you pick.
Common Types of Mortgage Loans
Once you’ve carefully assessed your situation, explore different mortgage loans. Here are some of the most common types of financing for first-time buyers:
Fixed Rate: This mortgage is offered with a certain interest rate and monthly payment that will never change. Therefore, you’ll always know exactly how much to budget for your payment, and you won’t be affected if interest rates ever rise.
Adjustable Rate: With an adjustable-rate mortgage, you’ll receive a low mortgage rate for the first few years and then it will be subject to change according to the fluctuating market.
FHA: These loans are popular with first-time buyers due to their flexible credit and down payment requirements, which can be as low as 3.5%.
VA: If you’re a service member or veteran of the U.S. armed forces, a VA loan may give you the opportunity to buy a home at a lower interest rate and no down payment.
We at North Jersey Federal Credit Union are committed to providing financial solutions to members throughout North Jersey, and surrounding areas. We have been the preferred credit union for over 80 years. We take a personalized approach to each member, so whether you want to secure a mortgage loan, open a line of credit, or access banking services as an undocumented immigrant, we will work closely with you to meet your financial needs. Call (973) 785-9200 to speak with a member service representative and visit njfcu.org website to explore our services. Connect with us on Social Media for news and updates.
