Best Home Mortgage Loan - What To Look For In A Mortgage
Written by: Carrie Reeder
With a credit score of 680 or higher, you have a plethora of
home loan options. Basically, you can choose your terms, but you
want to make sure you find the best financing package. That
means looking at financing costs, terms, and lenders.
The most competitive mortgage market is conventional loans,
including both fixed-rate and ARM. That means these types of
loans have the lowest rates. Add a 20% down payment, and you
will have lenders swooning over you.
Fixed-rate home loans offer security of a flat interest rate.
You will be paying the same interest rate over the entire life
of your mortgage. You can also lock in today's low rates. You
always have the option of refinancing if rates do drop.
An ARM provides lower rates with the risk that they will rise in
a couple of years. For those homebuyers who plan to move in a
couple of years, this financing can save you hundreds in
You can also choose a hybrid of the two, offering initial low
rates that will lock in after a couple of years.
The shorter the mortgage, the less you will pay in finance
charges. But your monthly payment will be higher with the short
term. The most common mortgage is for 30 years, but you can
choose a 25, 15, or even a 10 year mortgage. Choosing terms is
really based on what you can afford to pay each month.
Conventional lenders usually offer the best financing, even if
you need an unconventional loan. Jumbo and subprime mortgages
can be processed by conventional lenders. They will find
underwriters, which will add slightly to the interest rate of
your home loan.
Still you want to investigate all your lending options. Begin by
collecting rate quotes on a predetermined loan amount. This way
you are comparing similar numbers. Also, be looking at fees to
make sure interest savings are not offset by high closing costs.
When you have picked a lender, request a bid. This is when the
lending institution will actually look at your credit history
and give you real numbers. If you aren't happy with the terms,
don't be afraid to walk away from the deal. There are many
lenders to choose from.
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