ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Loan Requirements For First Time Home Owners

Updated on May 24, 2013

Home ownership is a big step, and just like other life accomplishments, it's important that you educate yourself so you can discover all the big and little surprises before they discover you.

So you're looking to buy your first home and you need to know what goes into it. This article will cover the basics about taking out a mortgage and purchasing a home.

Few can afford to buy a home outright. This reality has led to the practice of borrowing money from a bank to finance buying a home. The loan you borrow from a bank is called a mortgage. A mortgage agreement entails that the bank basically buys the home in your name. The bank will own your home until you have finished paying your mortgage, and can repossess it if you miss your payments.

Before you even decide what home you want to buy you'll want to look into the different programs offered by different banks. Each bank will have its own loan requirements and pay back rates. They may also have various fees, and pay back options. Who you have to deal with when negotiating your loan may also be important to you and you'll want to look into the customer service reputations of each bank. There are also new financing options becoming available. After the recent economic troubles, a good portion of the population has ceased to rely on banks. Loaning communities have become popular. An applicant will make an appeal for a loan. The loan is then financed by a number of private loaners, each paying a small amount, if the loan application is approved by the loaning community.

No matter who you choose to borrow money from, you'll want to put as much money down upfront as possible. This means you'll want to pay for as much of your house all at once as you can possibly manage. This will mean that you will have less money to pay back, your monthly bill will be lower, and it will affect the interest rate on your loan. You'll want to put down 10%-40% of the cost of your home. An average down payment is 20%. This means, if you have $5,000, you should be looking for a home that costs $25,000. Depending on what bank you choose to borrow from, they may have a certain percentage of the cost of your home that you have to put down.

The next consideration is your loan period. There are 15 and 30 year mortgages. Which one you choose will determine your monthly payments. If you get a 30 year mortgage then you will have lower monthly payments, but the bank will own your house longer. You will also end up paying more interest over the long run. A 15 year mortgage will get you out of the bank's shadow quicker, but the monthly payments will be higher and so the risk will be higher. Remember that missing payments will put you in danger of losing your house.

Lastly, you're going to want to try to be as debt-free as possible. The lower your debt, the lower your interest rate will be. You'll want to aim to be under $1000 in debt when you apply for your loan. Many people have student loans on their records and that will be counted against you when the bank calculates your interest rate. If your debt is too large, you may want to consider co-signing or buying a home in your spouse's name.


Submit a Comment

No comments yet.


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)