If you will take out a mortgage as a first-time homebuyer, lenders want to make sure that you’re able to dutifully repay the whole amount of the loan you’ll take, plus interest, until the end of the term. Because lenders take a considerable risk when lending money, they find it ideal to require borrowers to make an upfront down payment of 20 percent. If you think a 20 percent down payment is overwhelming, lenders may allow you to put a low down payment, but they will require you to pay a Private Mortgage Insurance or PMI. This could be a viable option if you want to fulfill your homeownership dreams.
Flood insurance is one of the several insurance policies that you need to have when buying a home. Flood insurance is common for homes in high-risk flood zone areas. As a first-time homebuyer, you might find it silly to get a flood insurance if the property that you’re about to buy is in a low-risk flood zone. The Federal Emergency Management Agency or FEMA has a good explanation of why every homeowner should have a flood insurance policy.