In June 2020, the median home price in the United States was around $295,300. That high price tag means that most people have to finance the purchase rather than pay for the house with cash.
That means looking for a great home mortgage and if you’re a first-time buyer, figuring out where to start can seem overwhelming at best.
Luckily, you can make sure you’re getting the best deal on a home loan before you sign on the dotted line. You just need to know what to look for. Here are a few key things to consider before you settle on a mortgage.
Understand the Types of Loans Available
Believe it or not, there are many types of home mortgage loans available to buyers. Before you can start shopping, you need to understand the options you have.
If you’ve served in the military, you may be able to qualify for a VA loan with lower interest rates and down payments. If you’re a first-time buyer, you may qualify for an FHA loan that has a more flexible credit score and down payment requirements. If you’re moving to a rural area, a USDA loan may be a great choice.
For buyers with at least 20% of the purchase price saved for the house and above-average credit scores, conventional mortgages may be the best option. These loans have both fixed and variable interest rates and loan terms of up to 30 years, making payments more affordable each month.
Get Quotes From Several Home Mortgage Lenders
Once you understand the types of loans you have access to, it’s time to start looking for the best home mortgage company. Shop around and get quotes from at least three lenders before you make your decision.
Compare the home mortgage rates and terms they offer and ask them to explain the difference between interest rate and APR so you can see how each loan will impact your monthly budget.
As a general rule, you’ll want to choose the lender that offers you the largest maximum loan amount at the lowest interest rate possible.
Be Mindful of Closing Costs and Loan Fees
Every lender will charge different closing costs and loan fees based on the type of mortgage you’re borrowing. Pay close attention to those fees before you agree to work with the lender.
Those closing costs and fees can impact how much you’ll have to pay out of pocket and how much you’ll pay each month toward the loan. If the fees are too high, you may not be able to afford the mortgage.
Choosing the Right Home Mortgage Takes Time
These tips should help you start looking for a home loan with confidence. Just remember that it’s okay to take your time.
Shop around and compare the quotes you receive in detail before you decide on a home mortgage. This way, you’ll know you’re getting the best deal possible.
Navigating the homebuying process can be tough. Check out our latest posts for more tips and tricks to help you buy your next house fast.