What do I look for in a mortgage?
There's a lot to consider when buying a home, and it's easy to get lost. Take your time, as this is a major purchase and will impact your life for many years to come. Do not be afraid to ask your lender questions as you go through the procedure of buying your home.
One common consideration is whether to get a fixed rate or a variable rate mortgage. This depends on your needs and the chances you are willing to take.
A fixed rate has the advantage of allowing you to know what you will be paying each month. There is little anxiety to a fixed rate mortgage. On the other hand, it is often higher than a variable rate, and if rates drop much lower than at the start of your mortgage, you may have to refinance to take advantage.
A variable rate mortgage often starts lower than a fixed rate mortgage, but can go higher or lower over the years. You just don't know what will happen. On the other hand, these may be easier to qualify for since the initial payments are lower.
You will also consider how long you want to go on paying for your mortgage. Common mortgage terms are 15, 20 and 30 years. A 15 year term has the advantage that you will pay less in interest, but costs more each month, making this mortgage, once again, harder to qualify for.
A 30 year mortgage is easier to qualify for, but you are, of course paying for 30 YEARS! You will pay significantly more in interest. Make sure you compare the payments and see whether a 15 year mortgage will be affordable for you. You might just be surprised.
Points can be very tricky. One point is 1% of your loan amount. You pay this at closing to the lender. You need to look at what you are paying in points and what you are paying in interest to figure out what is the best deal for you. Zero point loans are out there, but if you are going to stay in your home for a long time, it may not be a good deal, as the interest will be higher. You must think about the long term when buying a home. Look at the amount you will have paid in interest and points over five years or more. You want the best combination for you.
Are you a low income home buyer? Make sure to look for loans insured by the FHA, as these may be easier to get.
Were you in the military? Look for loans insured through the VA.
Self-employed? Poor credit? There are no-document loans, but they can be more difficult to find. You don't have to verify your income with these, but you'll pay more in interest.
For the rest of us, you'll probably have to go with a conventional mortgage.
Now that you have the terminology, it's time to look for loans. Make sure you compare deals from several vendors.
Site Map - Privacy Policy - Disclaimer
copyright © 2004-2008
