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7_Steps_To_Choosing_The_Best_Real_Estate_Loan_For_You

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									Title:
7 Steps To Choosing The Best Real Estate Loan For You

Word Count:
645

Summary:
A home loan will be your financial responsibility for years to come, so
it can be one of the most important decisions you make. Even tiny changes
in an interest rate – changes as small as half a percent – can cost or
save you thousands of dollars over the term of your loan. To enjoy an
affordable home, follow these seven simple steps:

1) You’d Better Shop Around!
Any market has thousands of mortgage brokers, and each broker has access
to hundreds of home loan programs. Wh...


Keywords:
Austin Texas Real Estate, Austin Real estate, austin texas real estate
agent, real estate agent


Article Body:
A home loan will be your financial responsibility for years to come, so
it can be one of the most important decisions you make. Even tiny changes
in an interest rate – changes as small as half a percent – can cost or
save you thousands of dollars over the term of your loan. To enjoy an
affordable home, follow these seven simple steps:

1) You’d Better Shop Around!
Any market has thousands of mortgage brokers, and each broker has access
to hundreds of home loan programs. Whatever your circumstances, there is
a home loan out there to suit you. The more mortgage brokers and
financing professionals you speak to, the more likely it is that you will
encounter someone who really knows the home loan program right for you.

2) Pick out the TERMS of your loan -- BEFORE comparing rates.
Home loan terms range from 30, 40 to 50 years and some are interest only,
meaning that you will only make interest payments each month and will
never pay off your mortgage. Another factor to consider when debating
terms is rate. Some loans have guaranteed fixed rates for the entire term
of your mortgage. Other loans are Adjustable Rate Mortgages (ARMs),
meaning that your interest rate will adjust after a guaranteed rate
period is over. When considering terms, also think about what pre-payment
penalty you are willing to accept. This penalty applies if you decide to
refinance your home loan or sell the house within a certain period of
time -- usually one to two years or longer.

3) Shop the rate and closing costs -- carefully
Have a mortgage broker pull a tri-merge credit report and then get a copy
of the report. Take the report and a copy of your tax returns with you
when visiting financing professionals. Be prepared to answer all
questions honestly and be prepared to tell the mortgage broker the price
range and the home loan terms you will need. Ask for two Good Faith
Estimates (GFE) – one with minimal closing costs and one with standard
closing costs.

4) Compare Total Monthly Payments.
Your GFEs will estimate TOTAL monthly payments on a home loan. These
estimates only guess what your taxes, hazard insurance, homeowner’s
association dues and other costs will be. Since mortgage brokers have no
control over these costs, some will underestimate them to make their GFEs
attractive. For this reason, always compare only the line item costs
associated with each loan. Line items costs include principal, interest,
and mortgage insurance.

5) Compare Closing Costs.
Closing costs can contribute significantly to the cost of buying a home.
Some mortgage brokers will underestimate these costs to make an estimate
seem competitive. Worse, closing costs and associated fees have confusing
labels, making them harder to compare. In general, compare the “Items
Payable in Connection With Loan” or the “Items Payable in Connection With
Loan” on your GFE – these are the costs that your broker may have control
over.

6) Compare Closing Costs AND Rate.
Does it make sense to choose the home loan with lower interest but higher
closing fees? Or would a home loan with much smaller closing costs but
higher rates cost you less? To decide, tally up how long it would take to
“make up” the difference. For example, if one home loan saves you $100 a
month through lower payments but costs $1000 more in closing costs, it
would take 10 months to “make up” for the closing costs.

7) Lock Your Rate!
Just because you are quoted a great rate, that does not mean that
interest will stay in place until you are ready to buy, so lock in your
rate 30-45 days before closing.

Deciding to buy a home is exciting, but choosing a mortgage can be nerve-
wracking. To make a smart choice that really will support you
financially, be sure to compare smart by following these tips. Then, you
can enjoy your new home – with the right financing.

								
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