As you shop for a mortgage, you will find a string of options with different plans and arrangements offered by a wide variety of banks and lenders. How do you choose the mortgage loan that will work best for you? Here are five tips to keep in mind as you explore your options.
- Start with how much you can afford
Before you shop for a mortgage, you should have already determined how much house you can afford. This includes checking your credit report and knowing where you stand. In doing so, you will have a better idea of the amount you need to borrow as well as your capability to pay the eventual monthly amortization.
- Evaluate your needs
Mortgages are not just limited to fixed-rate and adjustable-rate plans. There are loans that are specifically tailored to certain individuals, real estate goals, and lifestyles. For instance, if you are a veteran or a spouse of one, you may qualify for a VA loan. If you have a lower credit score, especially now that some lenders have increased their score requirement, you may want to consider FHA loans. Explore the options that fit your circumstances and determine if you would like to apply for one of these loans.
- Consider your real estate plans
Mortgage loans need to be paid off within a certain period of time based on the applicable interest rates. Before you commit yourself to a loan, consider your plans and intentions for purchasing a house.
If you intend to stay put in the house you intend to buy, a fixed-rate mortgage may be something you’ll want to look into. Adjustable-rate mortgages usually start out lower than their fixed-rate counterparts. If you plan on moving before the initial fixed term ends, consider this kind of loan.
Shop around for lenders
Mortgage options are not the only things you should explore. Check out different lenders as well. Lenders have different requirements, mortgage rates, and origination fees. As a rule of thumb, it is good to have at least three choice lenders. Ask around for quotes and determine which among these lenders offer the mortgage plan that fits your real estate needs and financial capability.
Of course, do not just consider the interest rate and fees. Find a lender with a good and solid reputation to avoid any costly mishaps in the future.
Review different loan lengths
Mortgages also come in various loan lengths, ranging from 10-year to 30-year commitments. A 10-year mortgage may require higher monthly payments, but it can also mean a better rate. A long loan length, say 30 years, might mean lower monthly payments, but three decades is a long time to pay off a mortgage. If you have the financial capability for it, consider a shorter loan term
In order to choose the right loan term, use a mortgage calculator to give you a projection of your monthly fees depending on the loan length
Our team can tell you more about mortgages and how to choose the best one for your real estate needs. Contact us today at firstname.lastname@example.org or 602.466.9771 to work with the best Scottsdale realtor near you.