If you’re ready to buy a home, there are a million things to consider and one of the most important aspects of the home buying process is finding the right loan for you and your future. With a financial decision of this caliber, you’ll want to take your time before committing to any type of loan.
There are a variety of loans out there, with some offering better rates while others are better for your personal situation and the trajectory you have planned for your future. From conventional loans to conforming ones, what is best for you? Follow these four steps to determine the answer:
Think about the type of loan
There are loans for every type of situation and person, whether it’s a young adult moving into a new home or someone about to retire. There are VA loan rates that can be appealing for one person while others may want FHA loans. Many people choose conventional mortgage loans, as they typically provide flexibility and attractive rates. They are also easier to apply for.
However, your credit score is key in this type of loan. Make sure to do your research on the various types of loans; from the USDA loan to a local loan, FHA, or VA, and when you understand the terms, rates, conditions, etc., you’ll be able to make the best choice for you. It’s wise to shop around for a loan before you choose a realtor.
Consider the length of the loan
Deciding on a loan term is particularly important, as this can help you decide on the type of offer which would work best for you. Determine how quickly you can pay off your loan or if it’s best to prepare for lower monthly payments over a longer time frame.
Both have their pros and cons, with rates affecting the final cost, so try to get as much information as possible about so you can decide everything from lender credits or closing costs, and the final time frame you choose. While paying less on a monthly basis may seem appealing, considering the other costs involved could show you where you may be spending more.
Take a look at the overall cost
It’s easy to find a good rate and think that could be the best loan for your needs. However, it’s wise to consider the terms before choosing a specific loan, because while the overall rate may seem great, there could be higher costs down the road, etc.
Making sure to get all the costs, fees, and rate fluctuations (if there are any) can help you carefully choose the loan that is right for your needs now and those of the future. While you’re considering loan rates, calculate building costs, remodeling costs, and anything else that could be involved with the home you’re buying.
Decide if a loan advisor is beneficial for you
It can be helpful to work with a loan advisor, as there is an overwhelming amount of information and options available in mortgage lending. It can be a challenge to understand it all on your own and know if you’re making the right decision for your future needs. They know the local markets and can help ensure you choose the best option for your needs in a family home.
It’s okay to go slow when looking for a loan. After all, this is a financial commitment that will span several years of your life, whether you’re planning on buying a home in a new city or where you live now.
Whether you shop around on your own or work with a financial advisor, always do your research to make sure you’re getting the best price, including everything from fees to costs, rates, and more. While there is a lot to plan for and think about, owning your own home will be worth it.
Amber is the proud homeschooling mother to four beautiful children, Damian (27), Rosaleigh (13), Carlyn (10), Naomi (7), and a wife to her loving husband, Chancellor. Her family also includes four cats.
She loves being a stay-at-home mom and feels blessed to be able to care for her children full-time and provide them with so many opportunities through Metro Detroit Mommy. In addition to Metro Detroit Mommy, Amber has a passion for hosting karaoke and trivia with L Sharp Productions. She enjoys the Metro Detroit nightlife especially, singing, dancing and meeting new people.