When you're shopping for a mortgage, its important to find the loan that best suits your needs. The first step is to determine the loan terms. Do you want a shorter term with larger monthly payments or a longer loan with smaller monthly payments? There are pro's and con's to both options, so it's important to consider what will work best for your budget, lifestyle, and overall financial goals.
Part of this process will be determining what type of loan will work best for you. There are three main types of loans that are available to consumers. They are conventional, FHA, and VA. There are also other types of loans available which include incentives for first time Buyers, zip code driven programs, and more.
Once you have decided on the loan term, the next step is to compare the monthly payments. This is where the process can get a little confusing at times. Different lenders will quote different interest rates and terms. It is very important to make sure that you are comparing apples to apples when you are reviewing your options. This means taking into account not only the interest rate but also origination fees, closing costs, or other fees that may be associated with the loans. The best way to be able to make an accurate comparison is to ask the lenders to provide Good Faith Estimates for you to look over.
It is important to look at the closing costs associated with the mortgage loans to get an accurate picture of your total costs. Make sure you know exactly what fees and taxes make up the closing costs before deciding on your mortgage.
Take the time to consider the tax advantages of a mortgage. Mortgages are typically tax deductible which can help reduce your monthly payments and save you money in the long run. These tax advantages should also be compared to what you might already be paying in rent. Since rent is normally not deductible on taxes, the difference can be significant. Therefore, when shopping for a mortgage, make sure to ask about any potential deductions.
Selecting the right mortgage is an important decision, but one that can save you money over time if done correctly. It is imperative to do your research, compare different programs and lenders and find the best option for your needs. Please feel free to reach out to us at anytime if you have any questions at all. We also are happy to refer to reputable local lenders that we have been working with for years if you are interested as well.
