Loan: Where to go to get the
Choosing the best home loan in
many cases comes down to choosing the best loans officer, and not
If you go to a particular
lending institution and ask the loans officer "Who offers the best
loan package?", the officer will probably recommend the institution
they are working for. And when that loans officer moves to a new
company, they will probably state that the best package is from
their new company. Hmm. See a pattern forming here.
So what is the best way of
finding the best home loan?
You can contact
traditional sources such as Banks, Credit Unions,
Savings and Loans, or
Mortgage Bankers. All of these institutions have their strengths
and weaknesses, and you may be satisfied with your search. But
remember, in most cases, they are trying to "sell" their own
programs, and will not inform you of a potentially better home loan,
because it is a conflict of interest.
This is where a Mortgage Broker
comes in, either through traditional channels or on the Internet.
Their major strength is that they can shop the market for whichever
lender has the best rate. (And this is faster and more effective
than you can do on your own). They can also handpick a particular
home loan lender that suits your needs exactly, and if that
submission is declined, they can simply repackage the loan and
submit it to another
lender. Once again though,
make sure you do some homework yourself to make sure that you're
getting the best rates. You don't want to find out that your
mortgage broker has a "greedy" loans officer who is finding the best
deal, then charging you a higher service fee, which nullifies the
gotten yourself approved, now what...
Youíve gotten yourself approved,
and now you need to decided which type of mortgage is right for
The type of life you lead
(or you wish to lead) should have a bearing on your decisions.
Below is a brief outline
of the 4 different types. (To get a full explanation of these
mortgages, talk to your mortgage lender or lawyer).
1) The Fixed Rate Loan is where
the interest rate stays the same for the entire length of the
mortgage. If you plan to stay in your house for 15-30 years, this
could be a good option because the monthly payments are easy to
budget and your payments are predictable.
2) An Adjustable Rate
Loan starts with an interest rate which is normally lower than a
conventional fixed rate loan, and after a specific period of time (ie
3,5,7, etc years), the rate will change to whatever the current
market conditions dictate. As the rate changes, your monthly
payment changes. So if you feel that youíre in an abnormally high
interest rate period, and you think that in the upcoming years the
rate is going to drop substantially, you may wish to try this
option. With this option, you may feel safer if your mortgage is
for a shorter period of time. And sometimes these loans have a
limitation on how much an interest rate can go up or down, thus once
again protecting you.
3) Jumbo Loans are for people
who need large amounts of money.
4) And finally, there are home
mortgage loans for first time home buyers. You can maybe take
advantage of FHA or VA government loans based on your income or
property location. You may be able to qualify with less income and
incur no down payment.
When choosing your home mortgage
loan, the things to consider are
1) how many years do you want
the loan to last,
2) how much can you afford to
pay each month,
3) your spending habits,
4) your anticipated income over
the term of the mortgage, and
5) how long do you plan to stay
in the home.
And remember, the shorter
your mortgage term, and the higher your monthly payments, the more
youíll save in
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Jennifer Fountain is a
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