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What To Know Before You Buy or Refinance A Home

March 17th, 2017 5:08 AM by Jackie A. Graves, President

Once you find your perfect house, make sure you make the right financing choices to complete the picture.

Many Americans start to think about their housing needs this time of year.

For some people, spring aligns with the school calendar, giving the time it takes to find the right home, arrange financing and move before the next academic year. For others, an income tax refund, coupled with refinancing a mortgage, is the way to fund a home improvement project.

For most people, a home is the biggest purchase of their lives. So how do you find the right loan products and lender?

• Research products and terms. Home loans come in two forms: fixed rate or adjustable rate. Fixed-rate loans come with terms varying from 10 to 30 years for consumers who want the security of consistent monthly payments plus a rate that won’t change in the life of the loan. Adjustable-rate mortgages (ARMs) typically are offered at a lower rate with an initial term of five to 10 years.

“A 30-year fixed-rate loan is by far the most popular mortgage product with borrowers, but ARMs can be a good option if you plan on moving or refinancing,” says Craig Evans, Ally Bank’s mortgage executive. “When we start a dialogue with a potential customer, we’ll discuss the various options and suggest products geared toward their specific needs.”

• Choose a lender focused on your needs. In a crowded mortgage landscape, it’s important to find loan experts to help you through the process. For example, the Ally Home Team is on hand to help home buyers through the home loan experience, from application to close, ensuring they answer questions borrowers have along the way.

“Service and communications are the biggest considerations when it comes to choosing a lender, whether it’s new construction, buying an existing home, or refinancing,” says Beth Foley, broker associate at Beacon Sotheby’s International Realty.

• Ask your lender what products fit your needs. For example, Fannie Mae’s HomeReady product may be a good option for first-time homebuyers and millennials. Key benefits include down payments as low as 3 percent, plus these loans are priced similarly to standard loan pricing, and flexible sources of funds can be used for the down payment and closing costs.

• Establish your limits. Some lenders provide useful tools to get you started, such as Ally Home, a new direct-to-consumer home loan service offered by Ally Bank, (ally.com). Its Affordability Calculator helps you analyze your household income and current financial obligations to estimate how much house you can afford.

• Refinance an existing loan. Refinancing is a potential option if it offers a better rate than your existing loan, allows you to lower your mortgage payment, or shortens the term of your existing loan. If you have considerable equity, it’s also a way to consolidate debt or fund home improvements.

— StatePoint / To view the original article click here

Posted by Jackie A. Graves, President on March 17th, 2017 5:08 AM

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