First Time Home Buyer Loan Options
If you are a first time home buyer in Chicago looking to acquire a house through home financing, then you have two very good options available to you. The first is an FHA loan, and the other is a conventional Chicago mortgage.
These first time home buyer loan options will greatly benefit you as they make acquiring your own home a lot easier.
As a first time home buyer, you are probably excited and raring to make that purchase. However, caution must always be exercised as paying for a house is never easy.
This is why you have to get acquainted with a conventional Chicago mortgage and an FHA loan first.
An FHA loan is a loan guaranteed by the Federal Housing Administration—that agency that is tasked to help people secure their own house.
Like a Chicago Mortgage, an FHA loan benefits a first time home buyer in many ways, particularly in the following:
- A very low down payment of 3.5%;
- Insurance in case of default thru the Private Mortgage Insurance (PMI);
- Low closing costs;
- Not so high credit score requirement;
An FHA loan is very popular, as it enables a lot of Americans to buy their first homes with the FHA guaranteeing to the lender that the loan will be paid in case of default.
The Chicago mortgage option is just like any conventional purchase mortgage that especially benefits the borrower who has a good credit score, and who can afford to give a higher down payment at the onset.
The following are what to expect when choosing this first time home buyer loan option:
- No private mortgage insurance;
- 10-20% down payment;
- Interest rates to depend on credit score and the market.
A conventional Chicago mortgage is a wonderful first time home buyer loan option that can serve you well in the long run, despite the rather large down payment compared to an FHA loan.
While the 3.5% down payment offered by an FHA loan home finance is considerably lower than the 10-20% required in the conventional Chicago mortgage option, you may find the other private mortgage insurance premium and other service fees attached to it are a bit too much to handle.
Acquiring your first home is a momentous occasion, but it does not have to become a nightmare later on.
This is why you need to consider your home financing options carefully, and find out which of the first time home buyer loan options will suit you and your financial situation best.