What Is a First-Time Homebuyer to Know?
Homeownership is considered part of the American Dream. Federal and state government programs are available to help homebuyers buy their first house. Still, first-time homebuyers should do their own research.
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Costs
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Buying a home involves three main costs. Earnest money is a deposit submitted with an offer on a home. The down payment is a percentage of the home's purchase price. Closing costs cover the cost of documentation needed to buy a house.
Prequalifying
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First-time homebuyers should prequalify for a mortgage to learn the maximum price of a home they can purchase. A mortgage includes the amount borrowed, plus interest. Homebuyers also must consider the total monthly mortgage payment, which includes the loan principal, interest, homeowners insurance and property taxes.
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Mortgage Types
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Mortgages can have a fixed or adjustable interest rate. A fixed rate stays the same throughout the loan term. An adjustable rate varies during the loan term, according to criteria specified in the loan agreement.
Considerations
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Conventional loans may require down payments of 10 to 20 percent, according to the U.S. Department of Housing and Urban Development. Federal Housing Administration loans offer down payments as low as 3.5 percent. The Veteran's Administration has zero-down loans for current and former military personnel.
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