Deciding Between Home Loans

Regardless of whether you’re buying your first home or your tenth home, choosing between the various available home loans takes considerable time. Even when you have an idea of what you need, your mortgage lender might make a suggestion that changes your mind. In order to get through the home buying process with as little headache as possible, ask yourself three questions to help you decide which loan option is best for you.

Home Loans - What are you looking for?

The obvious answer to this question is that you want to buy a home or you wouldn’t be shopping for home loans. Dig deeper to answer this question because much of your decisions rests on the answer. Think about how long you plan to stay in the home. Consider how your housing needs might change if your family grows.

For example, a borrower who wants to stay in the home for five to seven years might want different home loans than someone planning to live in a home the rest of their life. The former borrower can take advantage of the low interest rate on an adjustable rate mortgage, while the latter may want the payment security of a 30-year fixed rate mortgage.

Do you like the interest rate?

While the interest rate is not the sole factor for you to consider in the mortgage process, you should be comfortable with the rate you’ll pay. Eliminate home loans from consideration with rates higher than you wish to pay. Remember to stay somewhat flexible on this matter if the other terms make up for the higher rate. As long as your contract does not stipulate a prepayment penalty, you can cut your total interest expense for the home by making extra payments and paying off the loan early.

Can you afford the payments?

No matter what desirable features home loans may throw at you, the bottom line is that you must be able to afford the payments. This includes the potential payments if your interest rate is variable. Even when you don’t anticipate staying in the home long enough to experience a rate increase, make sure you can still make the payment at the higher rate. You may not ever have to pay the higher price, but it’s good to know you can in case something derails your future moving plans

From the Superpages.com