When you’re done with renting, want to settle down, or are thinking of starting a family, it’s time to consider buying your first home. The home buying process can seem daunting, and indeed, it is quite complicated. That’s why it’s important to understand the basics of the process so you can be informed and make smart decisions for your future. Once you find the home for sale that you want to purchase, you’ll have to consider how you’re going to finance it. Keep reading to learn about a few different financing options for first-time home buyers.
Fixed-Rate Mortgage
A fixed-rate mortgage is perhaps the most common type of mortgage loan for new and veteran home buyers. 30-year loans are most typical, though there are 15-year fixed-rate mortgages, as well. In a fixed-rate mortgage, you’ll have a set interest rate that stays the same for the entire life of the loan. This means that your monthly payments will stay the same, making it easier to budget your income and stay on top of what you owe. Though the interest rates for fixed-rate mortgages are sometimes slightly higher than other types of financing options, the stability and predictability of payments is quite attractive to many home buyers.
Adjustable-Rate Mortgage
An adjustable-rate mortgage (or ARM) is different than a fixed-rate mortgage in that the interest rate on the loan changes every year. Some home buyers prefer this type of mortgage because it has the potential to have lower interest rates as the market fluctuates, but it is this same unpredictability that makes other home buyers unwilling to take the risk that rates could increase.
Interest-Only Loan
For the first few years of an interest-only loan, you’ll pay just the interest every month, as the name implies. If you anticipate that your income will be steadily increasing in the next few years, this could be the right financing option for you.
Whether you’re looking to buy your first home or you’ve been through the process before, contact Castle & Cooke Arizona to learn about the best homes for sale in Sierra Vista. Call us at (520) 378-5110 to speak with one of our friendly team members about what you’re looking for in a new home, or visit our website for a closer look at the communities we’ve helped build.