7 Steps To Choosing The Best Real Estate Loan For You



7 Steps to​ Choosing the​ Best Real Estate Loan For You
A home loan will be your financial responsibility for years to​ come,​ so it​ can be one of​ the​ most important decisions you​ make .​
Even tiny changes in​ an​ interest rate – changes as​ small as​ half a​ percent – can cost or​ save you​ thousands of​ dollars over the​ term of​ your loan .​
To enjoy an​ affordable home,​ follow these seven simple steps:
1) You’d Better Shop Around!
Any market has thousands of​ mortgage brokers,​ and each broker has access to​ hundreds of​ home loan programs .​
Whatever your circumstances,​ there is​ a​ home loan out there to​ suit you​ .​
The more mortgage brokers and financing professionals you​ speak to,​ the​ more likely it​ is​ that you​ will encounter someone who really knows the​ home loan program right for you.
2) Pick out the​ TERMS of​ your loan -- BEFORE comparing rates.
Home loan terms range from 30,​ 40 to​ 50 years and some are interest only,​ meaning that you​ will only make interest payments each month and will never pay off your mortgage .​
Another factor to​ consider when debating terms is​ rate .​
Some loans have guaranteed fixed rates for the​ entire term of​ your mortgage .​
Other loans are Adjustable Rate Mortgages (ARMs),​ meaning that your interest rate will adjust after a​ guaranteed rate period is​ over .​
When considering terms,​ also think about what pre-payment penalty you​ are willing to​ accept .​
This penalty applies if​ you​ decide to​ refinance your home loan or​ sell the​ house within a​ certain period of​ time -- usually one to​ two years or​ longer.
3) Shop the​ rate and closing costs -- carefully
Have a​ mortgage broker pull a​ tri-merge credit report and then get a​ copy of​ the​ report .​
Take the​ report and a​ copy of​ your tax returns with you​ when visiting financing professionals .​
Be prepared to​ answer all questions honestly and be prepared to​ tell the​ mortgage broker the​ price range and the​ home loan terms you​ will need .​
Ask for two Good Faith Estimates (GFE) – one with minimal closing costs and one with standard closing costs.
4) Compare Total Monthly Payments.
Your GFEs will estimate TOTAL monthly payments on​ a​ home loan .​
These estimates only guess what your taxes,​ hazard insurance,​ homeowner’s association dues and other costs will be .​
Since mortgage brokers have no control over these costs,​ some will underestimate them to​ make their GFEs attractive .​
For this reason,​ always compare only the​ line item costs associated with each loan .​
Line items costs include principal,​ interest,​ and mortgage insurance.
5) Compare Closing Costs.
Closing costs can contribute significantly to​ the​ cost of​ buying a​ home .​
Some mortgage brokers will underestimate these costs to​ make an​ estimate seem competitive .​
Worse,​ closing costs and associated fees have confusing labels,​ making them harder to​ compare .​
In general,​ compare the​ Items Payable in​ Connection With Loan or​ the​ Items Payable in​ Connection With Loan on​ your GFE – these are the​ costs that your broker may have control over.
6) Compare Closing Costs AND Rate.
Does it​ make sense to​ choose the​ home loan with lower interest but higher closing fees? Or would a​ home loan with much smaller closing costs but higher rates cost you​ less? to​ decide,​ tally up how long it​ would take to​ make up the​ difference .​
For example,​ if​ one home loan saves you​ $100 a​ month through lower payments but costs $1000 more in​ closing costs,​ it​ would take 10 months to​ make up for the​ closing costs.
7) Lock Your Rate!
Just because you​ are quoted a​ great rate,​ that does not mean that interest will stay in​ place until you​ are ready to​ buy,​ so lock in​ your rate 30-45 days before closing.
Deciding to​ buy a​ home is​ exciting,​ but choosing a​ mortgage can be nerve-wracking .​
To make a​ smart choice that really will support you​ financially,​ be sure to​ compare smart by following these tips .​
Then,​ you​ can enjoy your new home – with the​ right financing.





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