5 Facts about Your First Home Mortgage that you May Not Know

5 Facts about Your First Home Mortgage that you May Not Know

Buying your first home is an exciting time in your life, and it’s only something that you get to do once. Your first home mortgage could have a lot more benefits than you may realize upfront, and you may also have more options than you realize. There are also a lot of interesting facts about mortgages that you may not have known!

1.First Time Home Buyers can use an FHA Loan

An FHA loan is a Federal Housing Administration Loan. These loans are useful for first time home buyers because you can put less money down as a down payment and they also require a lower credit score than other types of loans. This could be an excellent loan type to look into if you’re looking to save money on a down payment or you have poor credit.

2. First Time Home Buyers are the Minority of Home Buyers

It’s true, most people purchasing homes aren’t buying their first home. You exist within a smaller percentage of people that on average varies from 35% to 40% while the other 60% to 65% are buying an additional home. Many of these people are even looking to make their newly acquired homes into rental properties.

3. Refinancing Your Mortgage is Better Earlier than Later

When you refinance your home mortgage you lose a good deal of equity that you’ve built up, so if you even plan on taking out a home equity line of credit it’s much better to refinance earlier than later. 

4. Reading your Paperwork is more Important Than you May Realize

Understanding completely what you’re getting into is important, especially for first time home buyers. For instance, if there’s a prepayment penalty for your mortgage then refinancing may be complicated because of this fee. There are a lot of other things you need to be on the lookout for, so make sure to read your paperwork carefully!

Reading all of your paperwork is also a good way to understand exactly what your interest will be and what the bank expects of you in return for your mortgage. There are sometimes conditions with mortgages that are important to know that can vary depending on the loan type.

5. You can get Tax Credits for Buying Your First Home

These tax credits can allow you to cut down on your income tax rates. This is especially useful for those of us that are self-employed. For your first home, you can typically get tax credits for various things, it entirely depends on your state. The federal government used to offer tax credits for first-time homebuyers but that program ended, unfortunately. 

You can also get tax credits for adding green technologies to your home. Things like solar panels, small residential wind turbines, and geothermal heat pumps are all great home improvements that you can use to get tax credits. It’s also possible to get more money on your FHA loan if you plan on using the extra money to do green home improvements on your home.

Make the Most of Your Home Investment

Whether you’re looking to make sure you pay the least possible amount on your mortgage or you’re just looking for new ways you can remodel your house, making the most of your investment is important. Homeownership is a part of the American dream, and when you purchase your first home you can say that you finally have your own piece of the pie. Making sure that you find the lowest interest rate can make sure that you don’t pay too much interest, and finding a good homeowners insurance policy can help you avoid paying a lot of money when specific perils happen.