Minnesota’s home-buyers market is at an all time low, which is good news for any home buyer and great news for first time home-buyers. There are tons of homes on the market, and with so many different properties for sale you have a great chance at choosing your perfect starter home or finding the home of your dreams. If you are a first-time home-buyer there are even bigger advantages to buying a home today; you qualify for special incentives put in place to help ensure you succeed with your purchase.
Now even with the incentives, unless you can pay for this new home in full with cash at the time of the sale, a home mortgage will be required. Typically twenty percent of the purchase price is required at the time of the sale, and the rest is borrowed from some type of lending institution. This is why it is so important to act now if you have been thinking of buying; some of the first time home-buyer incentives can significantly lower the down payment required.
A mortgage is most likely the biggest loan you will ever take out. For instance, if you purchase a $100,000 home, you will probably need a mortgage note in the amount of $80,000 or more. That’s a large sum of money. When you make monthly payments to the lender, you will pay a combination of principal and interest. Initially, most of that monthly payment will pay little more than the interest accumulated on the debt. So most of your payments will be going to interest and not reducing the principal amount of the debt.
Because this is the case, you really need to focus on getting the best possible loan terms with the lowest interest rate. The lower the interest rate, the less it is costing you to borrow this money, and the sooner you will actually be paying off the principal of the loan. You also need to be aware of the different types of loans. A fixed rate mortgage means that the interest rate you are charged is guaranteed to stay the same. One example; you get a fixed rate, thirty year mortgage at the rate of five percent in 2009. You pay five percent interest on that mortgage no matter what the economy does until 2039.
Another type that is not as favorable is the adjustable mortgage. As the name implies, the rates adjust to the national average every year or two. So if national interest rates rise, your home mortgage interest rate will increase. If your interest rate increases, so will your monthly payment because it reflects the entire loan and the interest terms that came with it.
Interest rates are at an all time low right now and this is one of the best times in the market to get a fixed rate home mortgage. Houses themselves are at an all time low also. You could have piece of mind knowing you bought a house at an unbeatable price, and the mortgage you took out to pay for the house has an awesome interest rate.
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