Financing For First-Time Homebuyers

Many people considering buying their first home can be overwhelmed by the myriad of financing options available. But by taking the time to research the basics of property financing, homeowners can save a significant amount of time and money. Having some knowledge of the specific market where the property is located and whether it provides incentives to lenders may mean added financial perks for buyers. Buyers should also take a look at their own finances to ensure they are getting the mortgage that best suits their needs. Read on to find out which financing option may be right for you.

There are several mortgage loan types, which are differentiated by loan structure and the agencies that secure them.

Interest-only loans are a type of ARM in which the borrower is responsible for only paying mortgage interest and not principal during the introductory period until the loan reverts to a fixed, principal-paying loan. Such loans can be very advantageous for first-time borrowers because only paying interest significantly decreases the monthly cost of borrowing and will allow one to qualify for a much larger loan. However, because the borrower pays no principal during the initial period, the balance due on the loan does not change until the borrower begins to repay the principal.