The SCOOP! Blog by ChangeMyRate.com®

EXPLORING LOAN CHOICES

October 25th, 2018 3:06 PM by Jackie A. Graves, President

Understand the different kinds of loans available

A 30-year fixed-rate loan is a good choice for many people, but it’s not the only kind of loan available. Depending on your circumstances and goals, you might also see if a different kind of loan might suit you better.

What to do now

Learn more about the different kinds of loans available

Understand the different choices that together make up a loan option. Our guide explains the difference between fixed and adjustable ratesshorter and longer loan terms, and different loan types such as conventional or FHA. Our guide explains how to decide what is right for you.

Get a sense for market interest rates

Explore interest rates to learn a range of interest rates you may expect lenders to offer you, and how different loan options affect rates. For example, you might look at a 30-year, fixed-rate mortgage against a 15-year, fixed-rate mortgage to see how the interest rates compare.

Talk to your network of advisors

Ask them what kind of loan they got, if they would get the same kind of loan again, and why.


What to know

You can start to look at homes and explore loan choices at the same time

You may have already started looking at homes, or you may prefer to explore your loan choices a bit first before getting started with home shopping. It’s up to you.

However, don’t wait until you’ve found a home before you start thinking about your loan options. You want to have a pretty good idea what kind of loan is right for you before you put in an offer on a home. The action steps in this phase help you do that. Since there’s no right or wrong time to start looking at homes, we’ve put our home shopping tips at the end of this phase.

Your down payment amount affects your loan choices and your costs

Watch our short video to learn what to consider when choosing how much to put down. Many homebuyers choose to put less than 20 percent down. When you put less than 20 percent down, you will likely need to pay for mortgage insurance. Mortgage insurance adds to your loan costs, but it helps you get a loan you might otherwise be unable to get. Mortgage insurance protects the lender if you fall behind on your payments, which means lenders are more willing to lend to you. Mortgage insurance doesn’t protect you or pay your mortgage for you. Learn more about mortgage insurance and how it works.

There are multiple options for buyers with less than a 20% down payment

Some options may be cheaper than others depending on your specific circumstances, the local market in your area, and changing general market conditions. Ask lenders in your area what they recommend and why. Common options include:

  • If you’re considering a local program, ask questions and find out whether there are any conditions you have to meet. For example, you may need to pay the money back if you don’t live in the home for a certain amount of time.

Source: To view the original article click here

Posted by Jackie A. Graves, President on October 25th, 2018 3:06 PM

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