Statistically, first-time home buyers usually stay in their new home between 3.2 and 4.7 years. One of the common mistakes made by first-time home buyers is selecting a 30-year fixed rate loan program for financing. The chance of needing the financing for 30 years is actually slim to none. Statistics show the buyer will most likely not be in the home for 30 years, and if the home buyer is somewhat transient in their job or is planning a family in the near future, the home may not really meet the buyer’s long-term needs.
First-time buyers are often solicited with FHA loans and other types of low-money-down programs that are contingent upon 30-year financing. The interest rates that are offered, regardless of how low they might be, are often irrelevant.
Statistically, an interest rate that is fixed for three, five or seven years is a more realistic option for first-time home buyers. This allows buyers to capitalize on a low introductory rate and save a significant amount of money, which can then go toward the down payment on their next home.
It is of utmost importance to work with an experienced loan consultant that understands some of the practical aspects of financial planning. A well-versed consultant will ask you many questions about your short- and long-term goals, and assist you in choosing a loan program that is truly suited to those goals.