What to Look for in a Home Mortgage
Finance January 30th, 2012
If you are a first time home buyer, or you haven’t bought a home in years, you may be wondering what to look for in a home mortgage. If you have a decent credit score, around 700 or above, you are going to be able to choose from multiple different lenders. This is ultimately going to work to your advantage to get the lowest interest rate possible. You are going to want to research multiple different banks and financial institutions, while looking for a few different key things.
The first thing will be the financing costs. You need to decide weather you want a fixed rate mortgage or an ARM. The fixed rate mortgage will lock you into an interest rate for the life of your mortgage, unless the rates drop and then you will have an option to refinance at a lower rate. This is great if you plan on owning the home for a long period of time. An ARM rate may be lower at the time of purchase, but can go up in a few years. If you are looking to buy something, but don’t intent on keeping it for more than a couple years, I would suggest going with ARM mortgage, this can save you thousands of dollars on interest and fees.
Next you will have to choose the term, meaning the amount of time you want the mortgage spread out over. Normally anywhere between 10-30 years. The shorter the term, the lower the interest, however your monthly payment will also be higher so you have to keep that into consideration. You will need to choose the best suited terms for your income.
After you have looked into your financing costs, and your terms, you will have to choose a lender. Most conventional lenders will offer you the best loans, but not always so ask the lender to submit a bid. This is when the lender will actually pull your credit report and put together the terms. If you aren’t happy with what they have to offer you, try another lender.
With today’s low interest rates and competitive real estate market, you should be able to find everything that you are looking for in a home mortgage. Crunch the numbers yourself, and see what interest rates you can afford to pay and over what period of time. This way you know where you want to be before you apply. Do your research and get the best mortgage available.
Related articles
- A 30- or a 15-year mortgage, which is right for you? (freedommortgage.com)
- Cheaper mortgages for first-time buyers (telegraph.co.uk)
- Rate Mortgage Lenders (themortgagepot.com)
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