How Can I Find The Best Home Loan For Me?

Finding a home to buy is the easy part. It is finding a loan and getting financed that is often the hard part. What buyer hasn’t wondered- “how can I find the best home loan for me?” Unfortunately, home loans are not a one size fit all bargain. Novice home buyers can get stuck with a loan that sounds good to start, but soon morphs into something that they can no longer afford, or ever pay off.

Here are some tips to help you know the answer to that looming question- “how can I find the best home loan for me?”

First of all, you need to get your credit in check. If you are unsure what your credit is, everyone is entitled to a yearly free credit report- via three sources. Everything from getting a loan, to the terms of the loan… is largely based on credit. If you discover that your credit is not so good; try paying ALL bills on time, and pay more than the minimum payment, for twelve months. Do not open new or close old accounts for six months. This is an easy way to boost credit.

Make a budget. Figure what the total amount that you can finance is, and what monthly payment is affordable.

You should get pre-qualified for a home loan, if you really want to answer the question: “How can I find the best home loan for me?” Getting the loan prior to house hunting, can ensure that you are not trying to fit the loan to the amount….but rather the amount to the loan. Finding a home (first) creates pressure with contract obligations, and the buyer often makes a bad loan choice.

Many real estate offices will have their own mortgage lender. While this may be convenient, it is often not the most affordable route. Instead, you should do a comprehensive search for brokers and lenders. The internet is a great tool to compare offers, fees, points, terms, and what loans an institution or company has to offer.

There are all kinds of loans available. Most can be subdivided under three categories.

Fixed-Rate Mortgages
The interest rate will stay the same throughout the term of the loan.
A set monthly payment will be established, and it will never change.
This loan provides the homeowner with a sense of security against an interest rate going so high that they can no longer afford the note.

Adjustable Rate Mortgage (ARM)
The initial interest rate will be lower than the typical fixed rate mortgage. However, the initial rate is fixed for an introductory period. Then, the interest rate becomes adjustable to market conditions for the remainder of the loan. Good loan when rates are low.

Hybrid Mortgage Loans
This loan combines a fixed loan with an ARM loan . The initial term of the loan is at a fixed rate, but becomes an ARM.

Other options are: interest only loans, conforming loans, jumbo loans, FHA loans, VA loans, etc… Each of these loans have their benefits and drawbacks. Choosing a loan greatly depends on the individuals finances, credit, down payment money, and desired length of financing. Any reputable and competent broker can help you find out which of the available loans would be the best fiscal fit for you. This is a free service.

Most of the time interest rates are going to be pretty much compatible from one large lender to another. Where they get the buyer is with fees and points. Some lenders offer appealing loans, until you look at the fees due, or that will be added into the loan. So, pay careful attention to the details and ask plenty of questions!

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