Simple interest is calculated from the following components:
- Principal—The initial amount invested or loaned.
- Number of Periods—The number of periods to apply the interest rate.
A Guide to Buying Your First Home
The home buying process can be very intimidating, especially when it is your first time in the business. Most often, people rush into home ownership as the community sees it as a sign of adulthood and financial responsibility. They fail to realize the commitment and responsibilities that come along owning a home. They fail to realize that home ownership is not a guaranteed good investment. Believe it or not, there are people already in the business yet their finances are not the best.
Buying your first home means being financially ready to carry on mortgage payments as it is one of the greatest worries of every homeowner who’s not ready to offer full cash payment for their home. I’ll provide a few tips to help first-time homebuyers avoid common mistakes in the process.
- Mortgage Down Payment: As a potential homeowner, saving for a down payment should be your top priority. Most people will put 20% down but you can always find lenders taking much less than that and some first-time homebuyer programs would allow you go down as little as 3%. You should understand that putting down less than 20% will cost more and will require private mortgage insurance. A small down payment can as well be heavy on its owner.
- Study your Mortgage and Down Payment Options: You can always find different mortgage options out there. Each comes with different combinations of pros and cons. As a first time home buyer struggling to get the best down payment, you should understand that the amount you put down will have an impact on your monthly mortgage and interest rates. If you are interested in the smallest rates possible, you can go for a 30- years fixed mortgage program. You can as well go for a 20 or 15-year fixed loan if you can afford larger monthly payments.
- Explore State and Local Assistance Programs: Some states offer assistance programs for first-time home buyers with other bonuses including closing cost assistance, tax credit, down payment assistance, and discounted interest rates. Your state or county might be one of the few with these bonuses for first-time home buyers. All you need to do is research on your local area.
- Get an Experienced realtor: As a first-time homebuyer, you need someone experienced by your side to guide you through the process. A reputable real estate agent with intimate knowledge of your local area will be so much helpful. All you need to do is research on the various realtors in your area and choose wisely.
- Go shopping for your first home: After avoiding every possibility of financial disaster by understanding every available mortgage and down payment option, you can now go for house hunting, your real estate agent can be very helpful at this stage. Searching for a home at this time will be the perfect move as you already know what you can afford from your credit report. Your credit report is needed by a lender to determine what type of property you can afford.