There are so many different home loans available to perspective home owners, it is difficult to tell what the best home loan may be for a particular buyer, and it can be even more difficult and confusing if you have never bought a home before.
One of the first things you have to do is to determine how much home you can afford. Once you determine how much money you can afford to borrow for your new home, you should get pre-approved. People will tell you that a pre approval is the same as a pre-qualification, it’s not! Pre-qualified means that you meet some of the criteria that banks and lenders look at in order to get a loan. Pre-approved means that you have begun the loan process and you basically have a loan lined up, all you have to do is find the right home. Pay attention to the trends in interest rates, if you think that they are going to rise before your loan closes, ask your lender what you can do to lock in your interest rate.
VA Loan
If you have been in the military, a VA loan may be for you. VA loans often offer lower rates and fees than other loans; they can also be done where you do not have to put any money down for your loan.
FHA Loan
FHA or Federal Housing Administration loans offer lower rates, lower down payment as well as straight forward mortgage terms and easy credit qualifying.
ARM Loan
One type of home loan that you will want to stay away from is an adjustable rate mortgage or an ARM. Adjustable rate mortgages have interest rates that will adjust over time. This can mean that your monthly payment can go up several hundred dollars. Mortgages that have balloon payments, mean that they will not amortize (or mature) over the life of the loan. At the end of the loan a large balance or “balloon” will be due.
Finding the right home loan is just as important as the home that you choose to buy. Remember to shop around for the best loan and the best rates that are going to work for you.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
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