Shop to Find the Right Mortgage for You
Congratulations! You’ve decided to enter the world of home ownership.
Buying a home is likely one of the biggest investments you’ll ever make. You want to make sure you benefit, but with so many regulations and hoops to jump through, it’s easy to get caught up and agree to less-than-favorable terms. This is avoidable! Don’t let it happen to you. Shop around for your mortgage. It could potentially save you hundreds of thousands of dollars over the life of the loan.
There are a few things you can do to ensure you’re acting in your own best interest.
- CREDIT REPORTS.
So crucial to the home-buying process. Pull your credit report from all three of the credit bureaus: Experian, TransUnion, and Equifax. You are entitled to one free credit report per year, or whenever an application for credit has been denied. Make sure any negative marks are cleared up before trying to move forward with the process.
- HOUSING COUNSELOR.
Fact: The more educated you are on the process, the better you will navigate it. There are HUD-approved housing counselors who can help you learn about the ins and outs of home buying. Be sure to get more information if you don’t know what PIM is, can’t define escrow, or otherwise need to brush up on terminology and practices.
- SHOP LENDERS.
Different lenders may offer completely different mortgage options, so it (literally) pays to shop around. Interest rates could vary from one to the other or there may be additional fees or other expenses that make one option more favorable than another. You’ll have to give your information to several companies, but it could be worth it in the long run.
You might be able to get an even bigger discount if you run several pieces of business through the same lender. The loan process for another matter could qualify you for a lower rate or reduced fees.
Types of Mortgages
In general, there are two categories.
- Conventional Loans
- Government-Backed Loans
While they are similar, they are not the same.
A conventional loan is backed by a private lender, such as a bank, mortgage company or credit union. They assume the risk, therefore some of the requirements for a conventional loan can be more structured and rigid, but offer higher loan limits and have fewer regulations.
Government-backed loans are often routed through private lenders too, but the requirements are not as stringent because they are backed by the United States government. Some examples of relaxed criteria are lower down payments and flexible income requirements. While this program is aimed at first-time home buyers, due to some of the conditions (such as having the home be the primary residence; no rental properties) anyone can apply.
Within those categories, you can shop for a loan that suits your life and budget. A USDA loan is conventional but offers low rates and income requirements if you plan to buy and renovate a home in specific rural areas. Maybe you’re a veteran? There are VA loans designed specifically for those who have served. Perhaps you’d like to have your home custom built? There are loans that can help you with that, too.
A mortgage loan has an interest rate. It’s the amount of money you are paying the lender for granting your loan and is usually expressed in percentages.
A fixed-rate mortgage means that you will have the same interest rate for the life of your loan unless you refinance. It helps if you have a steady income and plan to live in your home for a long time. The payments are more predictable and easier to budget for.
An adjustable-rate mortgage (also called a variable or floating rate) changes rates according to the market. An adjustable-rate mortgage (ARM) is often very low in the beginning, but increases after the introductory period. This is a good option if you are planning to live in the home for a short amount of time and expect to pay off the loan within a few years.
Choosing a Lender
When shopping for a mortgage, you have to find a lender that understands your needs, desires, and concerns. Buying a home is a life-changing event you should be excited about!
At Galaxy Lending Group, we offer a variety of different mortgage loans and are sure we can find a good fit for you. We want you to be a happy client and are dedicated to providing outstanding customer service and guidance every step of the way. Our team is standing by to make your home ownership dreams come true.
Getting pre-approval lets the seller know that you are ready, eligible and not wasting any time. Let us get you pre-approved with a loan that is right for you today. Start by giving us a call or fill out our online form.