5 Tips to Get Low Interest Rate Mortgagesfor First Time Home Buyers

Zreilly20 By Zreilly20, 9th Jul 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/1gv778l5/
Posted in Wikinut>Money>Mortgages

It’s very hard to find low interest rate mortgages for first time home buyers. Arm yourself with this information and I’m sure you won’t have any problem in getting a low interest rate mortgage. Remember, it all boils down on how the lenders see you as a borrower. If you fix your credit and finances, you’ll be deemed as a credible buyer.

What Affects the Interest Rates in First Time Buyer Home Loans?

Securing low interest rate mortgages for first time home buyers is very important. Even a quarter of a reduction in interest rate can make a huge impact in your mortgage payment over the course of its term. Finding the best mortgage can be difficult, and getting approved for one is even harder. With our tips, you can have a greater chance in getting approved for low interest rate mortgages for first time buyers. Read on and save thousands of dollars in mortgage payments.

Every loan is individually calculated depending on a few factors. These factors may increase or decrease the interest rates and terms of any mortgage:

• Salary- borrowers with a steady source of income are deemed more credible and more capable of paying their dues.
• Down payment- buyers who can pay 20% or more of the property’s purchase price have more chances of getting approved for low interest mortgages for first time home buyers. Paying a big down payment reduces the risk to the lenders.
• Credit history- you need a good credit score if you want to be approved for a low interest rate mortgage.
• Loan to Value Ratio (LTV)- ratio between the loaned amount and the market value of the house. The higher the LTV, the higher the interest rate may be. In general, it’s hard to find a bank that will approve a loan with an LTV of 75% or higher.

The interest rate all depends on the associated risk for any lender. If the lender sees you as a low risk borrower, then you have a good chance of getting a good deal.

How can I get Low Interest Rate Mortgages for First Time Home Buyers?

1. Find a real estate agent that specializes in first time buyers. Building a relationship with an agent that specializes in securing good deals for first time buyers can help you save money and time. Before choosing an agent, make sure to inform him that you’re a first time buyer.You can also ask him if he’s had any experience in working with similar buyers. Some agents specialize in luxury properties, while others specialize in working with property investors, so you’ll just waste time by attempting to work with these types of agents. Since you’re a first time buyer, your agent will be your link to negotiating good deals and getting approved for low interest rate mortgages.

2. Minimize your existing debts. Making timely payments on existing debts is good. However, if you have too many loans, making monthly payments may not be enough to increase your credit score. If you have 5 or more debts under your name, consider consolidating them into one low interest loan. That way, all your other loans will be declared as paid and your credit score will increase. Better yet, you only have to worry about paying one lender instead of 5. If lenders see that you have an income to debt ratio above 36%, they will consider you as a big risk and you won’t get a low interest rate for your mortgage.

3. Consider short term mortgages, if you’re not planning to live on property for a long time. The term of the mortgage also affects the interest rate that goes with it. Lenders are more willing to give low interest rate mortgages for first time home buyers getting a short term loan. Why? Because there’s minimal risk for them and they get their money back quickly! The monthly payments may be higher, but you can definitely save more in the long run. This is a great option for buyers who are capable of making high monthly payments.

4. Consider base rate tracker mortgages for first time home buyers. This mortgage type follows the interest rate of the central bank, adding only 1% to 1.5% for their profit. This type of mortgage is affordable, especially if you can expect the interest rates to stay low for a long time.

5. Have someone with a good credit to co-sign your home loan. This works for young buyers who have parents or relatives with good credit that are willing to co-sign on their loan.

An experienced mortgage officer can help you get approved for low interest rate mortgages for first time home buyers. Their experience and connections can make the difference between a good deal and a fantastic deal. Since there are thousands of affordable mortgage options out there, the cost of their advice can easily be recovered in the savings that you’ll get.

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author avatar Rose*
22nd Nov 2013 (#)

The bigger the deposit you can save, the lower the interest payment.

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