How Do I Choose The Right Mortgage Loan Product For Me

Basic Documents Required Mortgage Loan
What Are The Basic Documents Required To Get A Mortgage Loan
December 9, 2016
Mortgage Loan
How To Prepare For A Mortgage Loan
December 9, 2016
Show all

How Do I Choose The Right Mortgage Loan Product For Me

Mortgage Loan Product

There are so many mortgage loan choices out there that one gets confused about which one is right for them. The US housing market is very strong and the prices of the house are rising constantly. The rate of the conventional loans is around 4% and the FHA and VA loan rates are even lower, which is one of the main reasons why mortgage lenders are approving so many applications. If you are looking forward to purchasing a house, it is important that you understand the entire process, so that there are no surprises later on. Let’s have a look at all the important details.

How Much Are You Borrowing?

For people who want to purchase homes or want to refinance it, there are several types of loan options available. The first thing that you need to know is the size of the loan, which is the amount of money that you will be borrowing. After this, you should know the amount that you will be spending and the amount that you will be putting down as the down payment. You can even use the help of a mortgage calculator in order to find out the basic math behind the loan.  

Which Loan Should You Go For?

Conventional loan

The most common loan is the conventional loan with 30 year fixed interest rate, as more than 65% of the people opt for it. Conventional loan is backed up by Freddie Mac or Fannie Mae and can’t be used for homes that have more than 4 units.

FHA Loans

The FHA loans are preferred by people because they have low down payment requirements and the approval standards are also very lenient. For most of the FHA loans, you only have to put down 3.5% down payment.

VA Loans

These are only for military borrowers and have no down payment requirements.

Fixed Rate or Adjustable Rate

Some people prefer the adjustable mortgage rates because it has low introductory rates and others prefer fixed rates because the interest remains the same for the entire length of the loan.  Analyze your financial situation before making a choice.

Know Your Credit Score

If you are still unsure about the type of loan that is suitable for you, you should know your credit score as that will help you out for sure. If your score is not up to the mark, you should improve it because high scores can help you in getting additional mortgage options.

Top Tips for Finding the Right Mortgage

Here are some of the tips that will help you out in getting a good mortgage deal:

  1. When comparing prices, don’t look only at the interest rate. Some of the things that you should be looking at include origination fee, and other points. Don’t fall for the ‘no fee’ loan because in such loans the fee is always a part of the rates.
  2. Have a look at the Good Faith Estimate worksheet even if you feel that it is really confusing. You should look at it and see if it itemizes the entire fee.
  3. Talk to the person that will be handling your loan and ask them about their experience and qualifications. The reason why you should do this is that you should know that your loan is in good hands.
  4. There will be additional costs like real estate transfer taxes, homeowner insurance and title insurance. This is one of the reasons why you should prepare for costs that are not charged.
  5. Only accept the program that you feel is the best one for you.
  6. Get the credit report before the entire process gets started, because you will have a clear understanding of where you stand.
  7. The loan officer should know about your situation when asking for quotes.
  8. Decide whether you want to have a low interest rate or pay upfront. Determine the term of the loan before deciding this.
  9. You should know what documents will be required, just so you can have them with you.
  10. You should know who you are dealing with when you fill the form asking for rates.
Cos Stratigos
Cos Stratigos
Cos Stratigos is the author of Mortgage Lending Place

Leave a Reply

Your email address will not be published. Required fields are marked *