Unless you are able to shell out cash to finance a home purchase, finding the right loan is an essential step in buying a house. There are a number of loan products and programs to choose from, as well as various kinds of lending institutions. This makes it important to know more about your options and look for a mortgage the suits your needs.
- Learn (as much as you can) about loan options. Poor or ill-advised mortgage decisions can hurt you in the future. Before you put your name on the line, be sure that you know and understand the different loan types and programs. It is not always advisable to choose a mortgage with the lowest rates without knowing the extra fees or taking into account how it will affect your finances later on.
- Assess your financial situation. Apart from learning about your mortgage options, it’s also important to determine how much down payment and mortgage you can afford. Flite Financial, Inc. and other mortgage companies in Missouri suggest knowing how much you’re giving up for a specific timeframe (15, 20, or 30 years) and how it will affect your goals and financial situation. Note that lenders can lend you more than what you can afford, so evaluate if taking a large loan will pay off in the future.
- Consider the basic options. There are two common types of mortgage: a fixed-rate loan and an adjustable-rate mortgage (ARM). With a fixed-rate mortgage, you will have an interest rate and monthly payment that won’t change over the life of your mortgage. With an ARM, the interest rates may decrease or increase depending on market trends. It has risks and rewards.
- Be an attractive borrower. You’ll have a better chance of securing a mortgage with low rates if you make yourself a good candidate. This means having a good credit, low debt-to-income (DTI) ratio, healthy savings, and good down payment. If your finances are not in good shape, waiting to improve it can help. It is also beneficial to prepare for the necessary paperwork.
If you’re ready to buy a home and apply for a mortgage, get in touch with a reliable lender. You can also get prequalified or preapproved first before viewing potential houses.