Being a first time home buyer is an exciting time in anyone’s life. After all, buying your first home signifies new beginnings, the true start of your adulthood, and a certain level of success in the world. It often also coincides with other exciting major life events, such as getting married or planning to welcome a new baby into your family. A first time home buyer is filled with possibility and often joy, but it’s also true that the home buying process can be nothing if not confusing, especially for the first time home buyer. One of the most important questions for a first time home buyer to ask is how they are going to finance their new home. The majority of home buyers, first time or otherwise, will need to take out a mortgage but many a first time home buyer does not know exactly what a mortgage means, what it entails, and the responsibilities it demands of the average first time home buyer. In fact, nearly sixty percent of all people who own homes in the United States wish that they had had a better understanding of their mortgage agreement when they had originally purchased their house – and many home owners still don’t fully understand the ins and outs of their mortgage agreement.
First of all, it’s important to understand that it is highly unlikely that you will be able to pay off your home right away completely out of pocket. Even people who are exceedingly well off do not choose to do that, even if they could. It’s a safer financial bet to take out a mortgage and pay off the cost of your house slowly and over time. This way, by taking out a mortgage, you can avoid removing a large sum of money from your account all at once, a sum of money that you may need if an emergency ever arises. Many people often also believe that if you can’t make a down payment, you can’t buy a house. While it is not necessarily recommended to purchase a house without at least some down payment – and preferably a sizable down payment at that – it is still a possible thing to do. In fact, nearly fifteen percent of home owners in the United States bought their homes completely with their mortgages and have been slowly paying them off ever since. While it will surely take them longer to fully pay off their mortgage, it allowed them to buy the home in the first place. At the end of the day, the first time home buyer must decide how important having a home is. For some people, the answer will be “very” and they will consider fully financing the purchase of their home with the mortgage that they take out. On the other hand, the majority of first time home buyers will simply decide to wait and save up until they feel financially comfortable enough to make such a big financial decision as purchasing a home – and can avoid purchasing it entirely through using a mortgage with no down payment in sight.
It’s also important to understand the different types of mortgages, such as the conventional mortgage or, for instance, FHA mortgage loans. If you understand the types of mortgages that you are looking at, you can better make a solid mortgage plan for first buying (and being able to afford) and then eventually paying off your home hopefully entirely. Taking out an FHA mortgage loan is relatively uncommon, and only less than twenty five percent of all new home owners do so. A fixed rate mortgage, our conventional mortgage, is exceedingly more common and popular in the United States, with more than ninety percent of all home buyers using a fixed rate mortgage to pay the balance on their homes.
Buying a home, though it is surely an exciting and life changing process, can be a stressful time for the first time home buyer, who makes up more than thirty percent of all home buyers in the United States today. It helps to know your facts – mortgage planning helps.