If you are a first time home buyer in Maryland, there are various finance options available to you. You can go through the real estate agents or look up online websites which deal with first-time home purchase loans. When looking for the right first time home buyer in Maryland, the lender has certain criteria to consider. This list of criteria will help the lender decide whether to give you a loan or not. In addition to this, you will also have to meet certain requirements.
Know the eligibility of getting a home loan
You must be at least 18 years of age. This is one of the most common requirements that first time home buyers in Maryland are required to fulfill before being given a loan. Even if you are not old enough to buy your own house, you still require at least an undergraduate degree, which is a minimum requirement. There is a Federal Debt Relief Program available for students, which is a good option for students who do not want to pay for their education in full.
You must have some amount of equity on your home. The equity should be more than the down payment. This will help you qualify for a better loan rate. The higher the equity, the lower the rate of interest you will be offered. For people who have no home to purchase, there are Federal Housing Administration (FHA) insured loans which can be used for purchasing a home.
The benefit of fixed rate mortgages
A fixed rate mortgage is a good option for borrowers in Maryland who cannot get an FHA loan. This type of mortgage will remain fixed for the entire life of the loan. The borrower will have to pay the same rate of interest throughout the loan and the lifetime of the loan. For a person who has sufficient income, this could prove to be a good financial option as he would not have to save much to purchase a home.
A first time home buyer in Maryland, who goes for an adjustable-rate mortgage could end up paying a lot more in the long run as interest rates rise. If the rate increases by just one percent, your monthly payments could go up by up to three percent. In addition, the repayment term could reduce from ten years to eight years. Therefore, even with an FHA mortgage, it is advisable to go for a fixed-rate mortgage. This way, if the rates drop further, you can always sell your home before the repayment period is over.
What all you need to know before going for mortgage loan?
One thing you need to know about this type of mortgage is that you will pay a higher rate of interest. This is because a lender faces a greater risk offering this type of mortgage to a first-time homebuyer. In addition to this, the amount of money that you can borrow will also be limited. The amount that you can borrow depends on how much you want to purchase. The mortgage amount and rate that you qualify for will usually determine the amount of money that you are able to borrow.
There are other options that a buyer can avail of, like for instance the cashout mortgage or the use of the line of credit. These two options are particularly ideal for people who do not intend to purchase a home for a long time. The only problem is that these loans will cost you more in fees. In addition, even if you get a low rate of interest, you have to pay taxes and loan servicing fees on the loan. You can simply visit cambridgehomeloan.com to find your best options for financing your dream home.