Buying a house for the first time involves a great deal of paradigm shift. First time buyers have been renting for a long time in the past and are used to a different lifestyle and purchasing attitude. Your first house purchase could probably be the most significant financial transaction that you will ever make. First time buyers should keep this always in mind and should not take any step in the house purchase process lightly. A lot of questions like credit and home affordability, house building utility and efficiency and your financial situation should be brought to consideration. While most home buyers would prepare money for the down payment and closing costs, it is also important to think ahead and consider maintenance costs, improvement expenses and taxes and insurances. These ownership costs should be added to the monthly house amortization and should also affect the way you make your choices.

Since very few people can afford to buy a house on outright cash, most people avail of a mortgage in order to buy one. A mortgage is a loan that is taken out in order to finance the house purchase. Each month, a payment is made until such time the full amount is paid off. There are presently thousands of mortgage lending agencies such as banks, mortgage companies and credit companies. Every mortgage lender adds an interest on the loaned amount which depends upon a specific economic index. The mode of payment of the interest depends on the mortgage programs selected by the borrower. The interest rate on the home mortgage is expressed in percentage and it accumulates as the balance of the loan remains unpaid.

Unlike interest on a credit card, interest on home mortgages however is usually tax deductible. This is why many people add up or “role” their credit card interest into their mortgage. By availing of a Pay Option Adjustable Rate Mortgage (ARM), you can easily refinance your credit card consolidation refinance into your house loan. The Pay Option ARM is advisable for home buyers with fluctuating income such as self-employed persons. This refinance scheme has four options for monthly payment. The first option is a fifteen year term of payment which allows you to pay your home loan faster saving thousands of dollars in interest. The second option is the standard thirty year term of payment used by conventional mortgage lending companies. The third is the “interest only” option which lets the buyer to pay first the interest portion of the monthly payment and the fourth is the 1% minimum payment which allows the payment of a 1% interest rate on your mortgage.

Unlike other mortgage rates, the Pay Option ARM is the most adjustable scheme where payments cannot be increased into more than 7.5% above the rate of the previous year. It also gives the home buyer the option to transfer to a fixed rate mortgage after the first three years.