Buying your first home in the state of Virginia
Are you buying a new home in the state of Virginia? Do you feel overwhelmed by all the choices you have to make as a first time home buyer? Decisions about what payment schedule to choose for your first mortgage or what amortization period you can comfortably afford; are just two of the many questions you are expected to contemplate when purchasing a home for the first time.
Whether it’s the mortgage basics, calculating payments or starting the pre-approval process buying your first home requires a lot of thought. Below are two main considerations first time home buyers are often faced with before they take the plunge into home ownership.
Many people assume that a 30 year mortgage will keep monthly payments low. Although monthly payments will be lower, if you can afford it, a mortgage with a 20 or 15 year term has significantly less interest in the total repayment cost than a 30 year term. For example, the monthly fee for 30 year term at a 4.5% rate is just over $1, 013 versus a 20 year term at the same rate, which would be about $1,265. However, the total interest paid over the lifetime of a 30 year mortgage would be approximately $164,800 compared to a 20 year mortgage, which would be approximately $104,700. That is a savings of over 60,000 for an extra $250 per month.
It’s a good thing to try out various options with a mortgage calculator to see how much difference a shorter term will make. If it isn’t that much more, it might be something to consider if it means you will pay off your mortgage years sooner and will pay significantly less interest over the lifetime of your mortgage. However, don’t forget to factor in your total housing costs such as taxes and homeowners insurance. When you look at your budget make sure that the total costs are not more than 28% of your total income or you could risk becoming house poor.
The most common payment option many home buyers in Virginia choose are monthly payments. This is because it usually coincides with when they receive their monthly or biweekly pay cheque making it easier to budget. However, a simple thing like switching your payments to a biweekly payment schedule will save thousands of dollars on your mortgage. Here is how it works. By paying monthly you make a total of 12 payments per year. However, a biweekly payment schedule results in 13 payments per year. If done correctly, you can take several years off your mortgage and thus own your home years sooner.
Buying a home in Virginia for the first time can be very stressful. But by preparing yourself ahead of time and understanding all of your options you can significantly reduce the strain that this major life event can put on you and your finances.
Aurora, a leading financial services company, has funded billions of dollars in loans across the United States and serves clients nationwide in more than 18 states and jurisdictions. A Direct DE FHA Lender, Aurora provides a broad range of financial products and services, including consumer banking and credit, corporate and investment banking. We have access to some of the best loan products in the industry. Leveraging our size and connections, we’re able to offer you the best rates available.
For more information on Aurora Financial, visit www.auroraf.com or call 1-(877) 887-1117.