It is a good idea to shop for a home loan at the point that you are starting your search to buy a home. Different loan types will have different down payment requirements. Some loan terms will include the payment of points that are calculated as a percentage of the loan amount. There are variables that will make a difference in your monthly mortgage payment. Additionally, when you apply for a loan, you will find out how much of a mortgage amount you will qualify for with your home purchase.
Choosing A Home Loan
There are many types of home loans available that it can be confusing on where to start or how to recognize which one you might want to use and that best suits your situation. The conventional home loan is popular and commonly used by home buyers. You can select from a 10-30 year fixed loan and the interest rate will not change throughout the course of the loan. When the interest rates are low, you are then able to lock in a low rate, and the monthly mortgage payments will not fluctuate.
About an FHA Loan And A VA Loan
Another type of home loan is an FHA loan. The FHA loan is a government-insured loan, and may typically have lower down payment requirements and a lower interest rate. Borrowers are usually required to have mortgage insurance. An adjustable-rate mortgage (ARM) will offer a low interest-rate at the beginning and will adjust yours at specific intervals of time. Your monthly mortgage payment will fluctuate depending on the current interest rate, a factor that can be very good if rates drop, however, it can be problematic if the rates rise. For many home buyers, a fixed rate mortgage is more desirable and advantageous. A VA loan is available for veterans, and it is a mortgage that is guaranteed by the Veterans Administration. The approval process will require more paperwork and more time to find out if you qualify. For those borrowers who do qualify, the VA loan offers them lower or no down payment requirement and an attractive interest rate.
With so many options, a borrower will usually seek the help of a mortgage broker. The process will help you determine how much money you should be considering to spend for your home, or stated another way, how much of home you can afford. A mortgage professional will help you find the right loan. For tips on saving money check out our blog for more!
