Buying a home is an enormous commitment. Securing the right mortgage with the best rate can be a challenge- especially for first-time buyers. Comparison shopping is essential to getting a good deal, and of course, it’s important to ask yourself how much you can afford to pay, before you get too far along in the process.
Here are some important considerations to make when choosing a mortgage:
1. Should I opt for a fixed rate or an adjustable rate mortgage?
2. Is it wise to pay for points?
3. What can I expect to pay in closing fees?
4. Do I qualify for any of the following special loan programs?
- VA loans
- FHA loans
- USDA loans
- First-time homebuyer loans
5. How much can afford to put down?
The answers to these question will depend on your unique situation and needs. There is no one-size-fits-all answer. With some research and help from your financial advisor, you should take the time to answer all of these questions thoroughly.
A Loan Estimate tool can help you to compare costs between the loans you’re considering. All of the lenders you speak to should provide a statement of potential loan’s costs and terms before you sign.
Compare the loan packages offered by numerous banks, credit unions, and online lenders. Ask your real estate agent and friends for referrals. Place credit unions first in your search. Credit unions are non-profit lending firms that usually have the best rates and lowest fees.
Limit your search to a 14-day period. Applying for mortgages outside this two-week window could lower your credit score.
Remember, when you sign, you’re committed to the long haul. You can expect to have a mortgage payment for the next 15 to 30 years. So it’s best to comparison shop diligently to find the best lenders available. Should you pick the wrong firm, or choose the wrong package, you could pay much more than you should have to.
Finding the right lender is more involved than simply securing an attractive interest rate. You also need to work with the best lending firms- firms staffed with professionals who can guide you safely through the selection process.
Finally, get your credit rating in shape. The higher your credit, the leverage you’ll have. Understand the lending market. Being in the know will allow you to spot the good and bad features of loan packages that might otherwise escape your notice.
Compare rates from numerous lenders. This point is critical and worth repeating. Ask lenders about their communication policies, fees, and requirements. Leaving no stone unturned. Read the fine print, always. Interest and principal are not the only costs of buying a home.
Read as much as you can, and ask questions. The more research you do, the better your chances will be of getting the best deal.