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What Do I Need to Know About Mortgage Loans?
When you decide the time has come to buy your first home, there is a plethora of information available for you to consider and research regarding your mortgage loan. This can seem to be a daunting task at first, with many avenues to explore, but regardless of your financial situation, there are still common tips you can follow to help ensure you have as smooth a transition into ownership as possible.
Where Do I Begin?
One of the first steps you can start with is to choose your mortgage loan program. Of course there is no specific right or wrong way to do this, but the more closely you can examine your own needs and financial capabilities, and compare them to the offers different loan program provide, the better suited you will find yourself in the end. If you feel you are inexperienced in the mortgage field, it may be best to consult a financial advisor to help you plan accordingly. If you are frank and honest with these experts, they can be a valuable tool in helping you discover financial needs and goals you otherwise may not have realized on your own.
First consider your current financial status, and then try to anticipate how you think your finances will fluctuate over time. Do you think they will stay the same, increase, or decrease? Think about what you can afford to pay monthly without endangering your financial security should your situation change.
Secondly, consider how long you intend to own your home. Do you want to keep it for an extended period of time, for example a decade, or do you want a more short term situation, perhaps lasting only a couple of years? This is an important factor to consider, as mortgage loans interest rates can change over time.
How Do I Get The Best Interest Rate?
When you are spending large amounts of money, like when you buy a home, interest rates are a very important factor to think about. Sometimes the difference between small percentages—sometimes as little as .5 percent, can result in a difference of thousands of dollars when stretched out over a period of time.
One of the best ways to research interest rates is by monitoring Wall Street, since rates tend to grow and drop along with the market. Also, another method to compare various lending companies is by looking at the Annual Percentage Rates (APR’s) they offer. These are all calculated differently between each lending company, based on various fees and surcharges, and also based on how you stretch out your loan. A 15 year mortgage will carry a different interest than a 30 year loan for example.
Meeting with the mortgage companies in person can also help you make your decision. Before any money is transferred or any loan contracts have been signed, you are free to ask any questions you have, and you are entitled to get answers you’re satisfied with. For some people, if two mortgage companies offer very similar (if not identical) rates, the choice comes down to the relationship they’ve established and felt comfortable with rather than the actual numbers.