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Mortgage Quotes: What You Should Know
Are you looking to secure a mortgage with a great rate? Your home is probably the largest purchase you will ever make, and you need to shop several lenders until you find one that quotes you the best mortgage at the best rate. Comparing mortgage lenders and negotiating, you can most likely save thousands of dollars. Mortgage information sources are as numerous as mortgage types. Mortgage professionals, including financial planners, real estate agents, home mortgage lenders, can also assist you in getting a mortgage. Our application puts you in contact with a wide variety of lenders locally and nationwide.
The first step in applying for a loan, as an informed consumer, is to know your credit score. Your current financial situation directly affects your ability to obtain a loan as well as partially dictate your financial freedom in the future. You must be prepared before you apply for a loan, and discovering your limitations and will predict what type of loan is realistic and right for you. To more efficiently achieve success with your loan, it is important to know your credit or FICO score before you apply. The accuracy of your score is just as important as learning your score itself. Appropriate research will prevent any unwelcome surprises at application time as well as allow you to correct any errors that may effect your approval. Read Some Tips on Mortgage Shopping.
Before house hunting, get an idea of what you can realistically afford. A rule of thumb is that you can buy a house that is approximately two-and-one-half times your annual salary. This will help you and your real estate agent narrow down homes to view in your price range. Try our mortgage calculator to get a better idea of how your income, debts, and expenses affect what you can afford.
First time homebuyers can easily get confused with the different types of loan options available. The type of mortgage has to do with how you'll pay for your loan, or how the lender is determining the interest on the loan. The three major types of mortgages are fixed rate mortgages, adjustable rate mortgages and balloon payment. How do you decide on a fixed rate mortgage or an adjustable rate mortgage? The best way to make this determination is to have a clear understanding of each loan type.
- A Fixed Rate Mortgage has a set interest rate for the life of the loan. The monthly payment is always the same amount because the Interest Rate stays the same. If the current interest rate rises, you will be protected from making larger monthly payments. On the flipside, should interest rates drop, you would have to refinance you current mortgage to take advantage of the lower mortgage rate. Interest rates are somewhat higher on fixed mortgage rates because the buyers are more protected by the fixed mortgage rate. When current interest rates are on the rise, a fixed rate mortgage is always the safest type of loan and usually the most popular option.
- An adjustable rate mortgage is a loan in which the monthly payment and interest rate will fluctuate with the current interest rate. Your Monthly payment will rise if interest rates go up. The upside to this type of loan is that if interest rates drop, so will your monthly payment. The adjustable rate is tied to an index, which is determined by the lender. Other terms of the lender may include how often the interest rate is adjusted, how much the interest rate can increase or decrease on any adjustment date, and whether there is a 'cap' on how high the interest rate can rise. The increases may occur every 3-6 months, or perhaps once a year. Often, adjustable rate mortgages are advertised with low interest rates that only remain in effect for a short period of time. When this period of time is up, your mortgage rate will increase. It is best to choose an adjustable rate mortgage if you have a secure income that will likely increase with the economy. When current interest rates are stable or on the decline, you might want to consider this loan type.
- A balloon mortgage is often a last resort for homebuyers who can't qualify for more traditional loans. Balloon mortgage loans are short-term fixed-rate loans with fixed monthly payments for a set number of years followed by one large final balloon payment for all of the remainder of the principal. Typically, the balloon payment may be due at the end of five, seven, or ten years. Choose a balloon mortgage loan for substantially lower initial rates, or if your credit limits the other types of mortgage that you can apply of qualify for.
When buying a home or refinancing, learn as much as you can about the process so you are informed. Once you are armed with a little info rmation, you are better prepared to find a loan. When you get a mortgage quote, don't only choose the lender with the lowest rate, choose a lender that is willing to answer all of your questions to help you throughout the loan process. This will help you have piece of mind through the loan process.
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