There are few people who can buy a new home outright with cash. Most people have to take out a mortgage loan, shown in the latest statistics that reveal in mid-2018, there was more than $15 trillion in outstanding mortgage debt in the U.S., according to mortgagecalculator.org.
Choosing the right type of loan is one of the most important decisions in the home buying process, but with so many different options, it’s hard to know where to start. If you’re purchasing Cincinnati real estate or a home in any other part of the country, these tips can help you find the most affordable mortgage loan for buying that new home.
Look at the Loan Options
Once you’ve looked at your financial situation carefully and determined how much home you can afford, you’ll want to look at the various loan options available, considering the loan type, the term and type of interest rate. Loan terms for a home are typically for 15 or 30 years, although there may be other terms available, with the length indicating how long you have to pay the loan off. A 30-year mortgage typically has a lower monthly payment as compared to a 15-year mortgage, but you’ll have to pay more in interest.
You’ll also need to look at the types of interest rates, whether adjustable or fixed. An adjustable rate has a higher risk – while it’s usually low initially, it can change throughout the course of the loan, which means your mortgage payments can fluctuate. A fixed rate means you’ll pay the same interest rate over the life of the loan, so the payments will be the same too. Most homeowners have a fixed rate mortgage loan.
Shop Around to Compare Lenders
Now that you have a better sense of the loan type you want, it’s important to shop around and compare lenders. One of the best places to start is by asking friends, family, coworkers and neighbors for recommendations. Also do some searching online, checking marketplaces that allow you to compare lenders and interest rates.
If you can get more than one offer, it can help you understand your options better and it may even provide more negotiating power. Experts say it’s best for potential homebuyers to research and identify the top lenders they want to consider, and then narrow down those options, creating a short list. After that, you’ll want to look at a variety of factors, such as the company’s expertise and years in business, customer service, reliability, and the key factor, the available financing options for your situation. An experienced lender should be able to help you select the most appropriate financing option and find the best rates.
Research the Lenders Reputation
Once you’ve decided on a lender, or a couple of them, it’s a must to research their reputation before ultimately signing that dotted line. Ask for names of past recent clients and speak with them about their experience with the lender. Be sure to check online reviews as well. If any questions come up in the process, ask the lender, as the more you know the better the odds of the best possible outcome.