You actually make two purchases when you buy a home. One when
you buy a home and again when you get a loan to finance that home.
Choosing the Right Home Loan for you Fixed Rate, Adjustable Rate or somewhere in
between. Home loans come in many shapes and sizes. Deciding which loan makes the
most sense for your financial situation and goals means understanding the
benefits of each. There are 3 basic types of home loans. Each has
different reasons you'd choose them.
Adjustable Rate Mortgage
-
Plan to stay in your home less than 5 years.
-
Comfortable with the risk of possible payment increases in
future.
-
Don't mind having your monthly payment periodically change
(up or down).
-
Think your income will probably increase in the future.
Fixed Rate Mortgage
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Plan to live in home morethan 5 years.
-
Like the stability of a fixed principal/interest payment.
-
Don't want to run the risk of future monthly payment
increases.
-
Think your income and spending will stay the same.
Combination Rate Mortgage
-
Want the stability of a fixed principal/interest payment in
the short term.
-
Want to repair your credit by demonstrating your ability to
make regular payments, then refinance for a lower interest rate.
-
Have a lot of consumer debt (these loans typically allow
more).
-
Want to borrow more and get a lower monthly payment than a
standard fixed rate loan.
Here are six ways to get the most bang for your money beginning
before you step out the door to shop.
Get pre-approved
Get pre-approved for your mortgage loan, rather than just pre-qualified.
With pre-approval, the lender pulls a credit report, verifies a borrower's
income and takes other preliminary underwriting steps to come up with a maximum
allowable loan amount, which usually doesn't change. The lender also commits, in
writing, to making that loan if a purchase occurs within a set amount of time.
In a pre-qualification, the customer provides the information, but the lender
doesn't check it and there's no assurance that the loan will be approved.
Check out ARMs
Short on cash? Consider an adjustable-rate mortgage. ARMs feature lower monthly
payments at first, something that might help marginal buyers get into a home.
If the one-year ARM's annual adjustment is too volatile for your tastes, some
relatively new adjustables offer initial fixed periods that endure longer.
Consider a longer-term ARM, such as a 5/1 or 7/1 that features an initial fixed
period of five years or seven years. You'll pay a little more in interest than
for their one-year counterparts, but less than for a 30-year fixed-rate loan.
Float a balloon
Balloon loans are another option available to get a lower payment in the first
few years. These mortgages charge less interest upfront for a set time frame,
but require the borrower to either refinance at the end of that period, pay off
the loan or convert it to a fixed payment schedule.
Buy down
the rate
If you've got the cash now and want to lower your payments, you can "buy down"
your mortgage rate. It's a simple concept, really: In exchange for more money
upfront, lenders are willing to lower the interest rate they charge, cutting the
borrower's payments. Trim closing costs
Of course, the mortgage rate isn't the only thing that determines how much
financing will set you back. Closing costs add a significant chunk of change to
the final bill, so borrowers should try to minimize them, too.
For more information on which home loan is right for you. Please take a few
minutes out of your day to
apply,
there is no obligation to find out which loan would be right for you, its fast
and easy, so
Apply Today! |
