What do you know about home loans? Whether seeking to get pre-approved for a home loan as a first-time homebuyer or learn the process of how to buy a house, knowing what options you have available to you is an important part of the process.
As a home buyer looking to find a home loan, you have fewer options than in the past. From the early 2000s until 2008, lenders were willing to float exotic loans based on risky terms. Due to the problems these loans caused, the industry has shifted to provide more sensible home financing options. Everything has to be verified, validated, tested, retested, and then audited.
Despite changes in the industry, you still have multiple options to consider.
#1. Fixed Rate vs. Adjustable Rate: With a fixed-rate home loan, your interest rate remains the same for the life of the loan. While paying on the loan, only a small portion of your payment pays the principal. Whereas an adjustable-rate mortgage, or ARM, can change depending on the term, that is, 3, 5, 7, or 10 years.
#2. Interest-Only Mortgage Products: As the name implies, interest-only mortgage products allow you to have the option to pay only the interest for the first few years of the loan. These loans are usually adjustable rates. In general, the longer you have the loan, the more principal you start to pay down from the beginning. The shorter the term, the less interest you pay.
There are so many ways to answer this question. Each loan has different guidelines and different requirements in terms of the down payment, monthly payment, debt-to-income ratio, housing ratios, and asset requirements.
Making your final decision on what type of mortgage to get, whether refinancing or buying your first home, comes down to the information you have and the lender you choose to work with. You need to know what type of questions and what topics should be discussed when deciding to choose a loan type and when choosing a loan officer.
It might not feel natural, but you should analyze what questions they are asking you instead of simply worrying about what information you need to gain from them in order to make your decision. After all, they are attempting to partner with you on this investment, and you should not take the responsibility of selecting the right home loan officer lightly.
In my next blog, you and I will take a look at what questions you should expect a loan officer to ask. Speaking of questions, do you have questions that we can answer for you? Call our office at 985-300-LOAN or check out my websites: www.WeeksTeam.com and www.StephanieWeeks.com
Every year an average of 21 million people apply for mortgages in the US, and only around 7 million close. I'm on a mission is to change that by spreading mortgage education. Sign up for my newsletter to be a part of my Mortgage Peace Movement!