Choosing A Mortgage Loan - Information and Advice
"Get the lowest mortgage loan rates and best home
equity loans."
You are wondering which kind of mortgage is best. The answer: There is no one
correct answer. There are almost as many types of mortgage loans as there are
personal financial circumstances.
Your
choice is extremely important and can take some time and effort to research.
While often neglected by homebuyers, a little research before choosing your
mortgage can save you thousands of dollars in the long run.
There are several elements of a loan that should be analyzed. While one of these
elements may suggest one type of loan, another may call for a different type.
You must weigh each ingredient separately and collectively.
You will find that
your answers to the questions below will help you determine the type of
mortgage that best fits your needs. Once you have your answers, click here to
check
current rates for mortgage loans.
How long do you plan to stay in this home?
Five years? Ten years? Thirty years? The length of time you will be in the home
will certainly play a part in determining which loan to apply for. If you only
plan to be in the home for 5–7 years or less, you should seriously consider an
adjustable rate loan. If you intend on staying 20–30 years, a fixed rate
mortgage may be right for you.
How much risk are you willing to accept?
If you are the type of buyer that needs to know exactly what you will be paying
each month for the term of the mortgage, a fixed rate mortgage will fulfill this
need. The fixed rate loan, however, will also net a higher interest rate. If you
are willing to take some risk of fluctuations in the interest rate, you may be
able to receive a lower interest rate.
What are your income expectations?
Plan for the future. Do you anticipate a gradual or dramatic increase in your
income in the next few years? If you expect a big increase, a graduated payment
mortgage may be best for you.
How much cash do you have available for upfront costs?
If you have the resources, you may want to make a larger down payment to lower
your monthly payment. By keeping a higher monthly payment however, you might be
able to shorten the term of the loan to a 15-year loan in order to pay it off
quicker.
Keep in mind that you’ll have closing costs and fees to pay in addition to your
down payment. If you don’t have much cash saved for your upfront costs, don’t
despair. You may be need to accept a higher monthly payment or even lower your
monthly obligation by choosing an adjustable rate mortgage.
Other important factors
In addition to choosing a type of loan, you must also consider which lender to
use. Once again, several factors will influence your decision.
Annual Percentage Rate (APR)
This is most likely the best way to make an "apples-to-apples" comparison of
lenders. The APR reflects the cost of credit on a yearly rate and includes any
points and fees in addition to the interest rate.
Interest Rate
Find out the rate the lender will commit and how long the lender will guarantee
it. Get any commitments in writing. As with any transaction, if it isn’t in
writing it doesn’t exist.
Points and fees
These factors will vary greatly. Look out for hidden fees. Make sure the lenders
disclose all fees; ask what they charge and what is included and what is not.
Loan Approval
Both approval and funding time should be considered. You don’t want to lose a
prospective home because your lender takes weeks to fund your loan. A lender
should be able to fund the loan within ten days.
Lender Reputation
Don’t rely on solely someone else’s recommendation. You, not your friend, must
feel comfortable with your lender. If you do feel good about your lender and
trust him , it will be much easier to trust his advice on what kind of mortgage
will best suit your needs.
Mortgage Loans - Related Pages
Selecting
The Right Mortgage - How to choose the right mortgage based on your
lifestyle - Advice on the best mortgages for different phases of life, future
income changes, and risk levels.
Online
Mortgage Application - Advice on doing an online mortgage application
- Tips on what you need to know - How to apply online in five minutes and have
an answer in fifteen minutes.
Down Payment and
PMI - How to leverage your down payment - Buy a larger home where
your equity grows faster and avoid PMI using a two-loan strategy. Learn the 100%
financing technique. Avoid paying for private mortgage insurance (PMI) on any
mortgage where you put less than 20% down.
Interest
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Reduce your payments to a minimum level - Discover how to grow home equity
without paying to create it.
Mortgage
Recommendations - Advice on choosing mortgage programs that fit your
specific circumstances - Explore mortgage payments for different types of
mortgages.
COFI Loan Pros
and Cons - Information about COFI Loan pros and cons - Benefits of
using COFI ARMs rate index - COFI loans characteristics to watch out for.
Online Mortgage
Broker - How to use an online mortgage broker to save big on your
next home loan - Advice on what works and what to avoid.
Zero Down
Mortgage Loans - How to buy your home with no money down and no PMI -
Use zero down mortgage loans to avoid paying private mortgage insurance and
lower your loan payments.
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