In this blog series, the Certified Residential Mortgage Loan Officer from Rock Mortgage explain the questions they ask every mortgage applicant, why it’s important for the success of their application and how it effects the amount they will pay as a homeowner.
One of the most key questions that we ask every first-time homebuyer is “How long do you plan on staying in your first home,” and for some, it can be difficult to answer because life can throw unexpected curveballs as we all well know.
However, it’s important to consider this timeframe when purchasing a home because the planned duration a homebuyer stays can guide what home product is best for them.
Statistically speaking, the average first time home buyer only stays in their first home for five to seven years. For homebuyers who plan that this home purchase is just a stepping stone to the future, an FHA home loan is a great option. FHA loans require only a 3.5% down payment and offer some of the lowest interest rates available on the market. However, by choosing an FHA home loan homeowners must pay mortgage insurance for as long as they own the home which significantly increases the investment without the expectation of a return.
While Mortgage insurance is required on FHA home loans for the life of the loan, this is not true for conventional loans. Mortgage insurance on conventional loans is only necessary until 20% of the home’s equity is paid. So, some conventional loan home buyers choose to put 20% down from the start to eliminate mortgage insurance altogether. For homeowners who plan on staying in your first home for 10 years or more, this route could save money in the long term. Conventional loans have slightly higher rates than FHA. However, the slightly higher rate is still typically lower than the cost of mortgage insurance for the lifetime of the loan.
For additional information about FHA and Conventional Loan options, Rock Mortgage’s registered home loan experts can advise you on which mortgage options are best suited for your individual needs. Call Rock Mortgage today at 832-230-3067 or visit us online. We look forward to guiding your home mortgage process.