When shopping for first time home buyer loans it's wise to compare lenders and loans to get the best mortgage loan for your needs. Among the first questions you should ask yourself is how big a mortgage can you afford?
The answer should come from your gut instinct and only after you have spoken with a qualified lender. Ultimately you're the only one who can determine what you can realistically afford. You need to do your homework about first time home buyer loans and find out the maximum mortgage you qualify for and then give some thought as to whether it falls within your personal comfort zone.
A potential lender will run some numbers for you and come up with a magic number based on the financial information you supply and your personal credit history. Although it may be in the ball park of what you can afford, it may prove to be too much of a financial hardship in the years ahead.
First off, if you currently rent don't use your monthly rental fees as a comparison. First time home buyer loans are very different - it's like comparing apples and oranges.
Use your monthly rental costs as a guideline only. On one hand it would make sense to compare the two but you also have to consider other factors such as the need to pay extra for property taxes. In a rental situation such taxes were incorporated in your rent. Property taxes can vary between a few hundred to a few thousand dollars per year depending on where you reside.
Furthermore, did your rent include utilities? If so, you also need to factor in the cost of gas and hydro in addition to the cost of any loan. And what about having enough money you can put aside as an emergency fund for home repairs and general maintenance? Remember you no longer have a landlord you can call upon when something needs fixing.
Then there's mortgage insurance to consider. This is especially important if you have a high-ratio mortgage.
Another good rule of thumb when shopping for first time home buyer loans is that if your current rent falls within your comfort level, aim for a slightly lower monthly mortgage payment.
Exploring your total monthly debt load as well as your total monthly housing costs is one of the best ways to figure out what is a realistic mortgage payment.
Your next task is to find a lender who specializes in such loans and who will offer you the best deal. Again research and comparison is needed. It will take you some time to investigate both lenders and loan packages. But it's time well spent. The time you took to find the best company could literally save you thousands of dollars over the course of your mortgage.
The bottom line when searching for first time home buyer loans is to invest in doing your homework. Research all your options before you start looking for that dream home.
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