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Consider These 3 Factors When Buying Your First Home

Take some of the guesswork out of buying your first home by considering these three important factors.

April 28, 2023 | Michael Frerking

Caucasian man and women holding hands and smiling at each other as they walk towards a brick house

Between bouncing interest rates and the often-unpredictable cost of home ownership, it truly pays to have an expert team in your corner when buying a home, especially if it’s your first.

There are several factors to keep in mind when considering your first home purchase, but these three are arguably the most important. Be sure to weigh them all carefully and, when you’re ready, OMB’s team of mortgage experts will be here to support you during the entire process, from start to finish.

Rent rates versus mortgage interest rates

For first-time homebuyers, when to buy is one of the most important questions to ask and rates play a large factor in that. If you’re currently renting, chances are you’ve seen an increase in your monthly payment lately. Credit Karma reports rental prices in Missouri increased 8.45% from 2021-2022.

These rent increases make examining how a house payment would stack up against a rent payment each month worth it for many consumers.

Fixed interest rates for conventional home loans have risen quite a bit from their historic lows during the pandemic but are still relatively low based on Freddie Mac, a government housing agency, data going back to 1971. With these rate trends, now could be a great time to shop for a home and take advantage of mortgage rates while they’re low.

Get the ball rolling with loan pre-qualification

Some mortgage lenders offer free, no obligation pre-qualifications that can take a lot of the guesswork out of what monthly payments, a down payment and closing costs could look. This is a great option for examining your current situation and what type of loan could best fit your needs - particularly if it’s your first time purchasing a home. Just remember, this is still a hard inquiry on your credit so you’ll want to keep that in mind.

This step in the process is also a great way to compare housing payments to rent payments and discern which gives you the best options for affordability within your budget. OMB is proud to offer free mortgage pre-qualifications!

Mortgage loan programs to fit nearly every need

One of the most common reasons first-time homebuyers put off buying a home is that they assume they need to make a hefty initial down payment.

In fact, there are several loan programs that offer fixed rate home loans with little-to-no down payments. Some don’t even require you to be a first-time home buyer to qualify.

Here’s a few details on some of the most popular options:

  • First, there are Federal Housing Administration loans. FHA loans only require a 3.5% down payment with options to receive a portion from a family member as a gift. Furthermore, as a first-time homeowner, you can also look at options through the Missouri Housing Development Commission which offers some down payment assistance and can cover a portion of closing costs.
  • Secondly, there are loan programs that only require a 3% down payment. The Conventional 97 loan is designed for borrowers with good credit that may have either modest savings or a desire to save on the upfront cost of a down payment.
  • For those looking for a home outside of urban areas, you may qualify for USDA rural development mortgage loans that require no down payment. This program can also provide significant financial assistance for low-income households.
  • Finally, eligible veterans and servicemembers can apply for a VA home loan, many of which require no down payment. VA loans also offer competitive interest rates, low closing costs, and can be applied for multiple times.

All of these loan types offer fixed 30-year rates that are comparable to, or in some cases lower than, conventional home loan rates.

To learn more about these loans programs and their requirements, ask more questions or even apply for a loan, you can reach out directly to our experienced team of mortgage professionals.

You can also check out the home ownership section of our blog to learn about some of the most common mistakes a first-time home buyer can make, as well as a detailed explanation of the mortgage process.

OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision.

What have mortgage rates done lately?

Rental rates in the state of Missouri have risen recently, but what about mortgage interest rates? Here's an interactive chart to help see the recent historical data from Freddie Mac.

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