Looking at getting a mortgage for a new home? Shopping around is the way to go! According to Freddy Mac, you can save about $1,500 if you do.
You do not want any old mortgage, though. Find a loan that is the right fit for you. Learn how to shop for a mortgage to do it right.
Here is what you need to know.
How to Shop for a Mortgage
Before you apply, you need to get prepared. It is time to learn all about mortgages!
There is more than one type of mortgage. Each one has different terms and qualifications you will need to understand. Here are a few types you will encounter while shopping for a mortgage.
These are loans backed by a traditional financial institution. A private bank or lender will have their own requirements for credit score and down payments.
These are loans backed by the Department of Veteran’s Affairs. People who have served or are serving in the armed forces may qualify. You will need to check your veteran’s benefits for qualifications.
Government Insured Mortgages
These are loans that the U.S. government insures for the lender. Some of these loans include FHA, USDA, and VA loans. They have strict requirements but can offer options for those with less than perfect credit.
While strict, they do have lower down payment requirements than conventional.
How To Choose
The right mortgage for you depends on a few things:
- How long you plan to be in the home
- It is your permanent home
- How much you have to put down
- If you are a first time home buyer
- How much payment you can afford
- How much the property costs
Consider any loan you qualify for. Read the details of each one, and make the choice that works best for your situation.
All loans have an interest rate. What you qualify for depends a lot on your credit score. There are two basic things that are critical to understanding your interest rate: Is it fixed or adjustable?
Adjustable or Fixed Interest Rates
Fixed interest rates stay the same over the term of the loan. Adjustable rates change according to a specific timetable. Make sure you understand how your payment changes with an adjustable interest rate.
Check the Down Payment
A down payment is the amount of money you pay up front towards the home. This amount can be large, so make sure you understand what is expected.
Some loans, like the VA loan, can give a buyer a 0% down option. Most loans expect some kind of down payment, though. The more you put down, the better.
Here is a guide for estimating the expected down payment:
- Conventional Loans – 5% to 20%
- FHA/USDA/Other Government Loans – around 3.5%
- VA Loans – 0%
When applying, check with the lender for details about down payment requirements.
Know Your Closing Costs
Check out the closing costs for the loan. Your lender will supply a statement that shows a breakout of the costs involved.
Make sure you ask questions about costs or fees that do not make sense. Know whether you are paying them up front or financing them into the loan.
Financing your closing costs can reduce the amount you pay up front. However, it adds a significant amount of interest to the total cost of the loan.
Get Financed Today!
Shopping for a mortgage does not have to be hard. You do need to educate yourself.
Compare types, terms, and interest rates to find the best loan. Learn how to shop for a mortgage and get financing for your home today!
Looking for a mortgage? We can help! Contact us today.
7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with every phase of each mortgage transaction. If you are searching for a home loan in New Jersey, Pennsylvania, Virginia, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.