By: Nicholas S. Key; Branch Manager
Navigating a seller’s market can be a formidable challenge for potential homebuyers. In 2021, the median price for Middle Tennessee homes increased by 22.4%. Additionally, potential homebuyers must make numerous decisions regarding financing and loan options throughout the homebuying process.
At First Farmers, we aim to simplify the process and help make customers’ dreams of homeownership a reality by offering various home loan options and mortgage plans, such as fixed-rate mortgage loans, adjustable-rate mortgage loans, and different government-backed loans. It is important to weigh the pros and cons of these options before deciding on a loan type, as each kind has its advantages depending on your unique needs and situation.
Fixed-Rate Mortgage Loans:
A fixed-rate mortgage loan has a set interest rate that does not change throughout the duration of the loan. Since the loan has a fixed cost, it can make it easier for homeowners to budget for this monthly expense. This loan also serves as added protection against fluctuations in mortgage rates. It is an excellent option for those looking for a budgeting-friendly option and those looking to purchase a long-term home.
Adjustable-Rate Mortgage Loans:
The advantage of adjustable-rate mortgage loans is that they typically have much lower monthly rates than fixed-rate mortgage loans for the first several years you make payments. It is generally easier for potential homebuyers to qualify since the lending requirements tend to be less strict. Adjustable-rate loans are ideal when interest rates are high and may be well suited for those looking to buy a starter home.
Government-Backed Loans:
While fixed-rate and adjustable-rate mortgage plans are the most common loan types, it is also important to consider whether you are eligible for certain government-backed loans, such as FHA, VA, and USDA. FHA loans generally require smaller down payments and enable those with lower credit scores to qualify to buy a home, making them an excellent option for first-time homebuyers. VA loans are available to active-duty and veteran military officers and surviving spouses. These loans usually have lower interest rates and may not require a down payment. USDA loans are available to select rural homebuyers, normally requiring lower down payments and credit score requirements. Those interested in this loan type can visit the USDA website to see if they are eligible.
While deciding on a mortgage plan can feel overwhelming, the First Farmers mortgage team is happy to help you identify the right plan and resources for you. To get started, you can fill out our online home mortgage loan application or visit your nearest First Farmers location to meet with our team and apply in person. For additional resources, you can browse our list of certified mortgage lenders and try our free mortgage calculator today.
References to resources or organizations listed in this communication do not constitute or imply endorsement or support by First Farmers & Merchants Bank.
