Once you have found the home of your
choice, you may think that your shopping days are over. Actually,
only the first phase has been completed. Next comes finding
a mortgage and payment terms that fit your budget. Where you shop
and what you look for are important.
You might start by looking for a mortgage at the bank where you have your checking or savings account. But don’t
limit yourself. A wide variety of institutions make home mortgage
loans, including savings and loan associations, commercial banks,
mutual savings banks, and mortgage companies. The mortgages these
institutions offer will have varying features. One way to find the
creditor with the most attractively priced loan is to look in your
local newspaper; check to see if it publishes a shoppers guide to
mortgage credit. These shoppers guides are available in many localities
and can be used to identify the lenders with low rates. But, basically,
the way to find the loan with the most attractive terms is to shop
around. Allie Mae can assist you.
You should have in mind some of the
things to look for in a mortgage loan. For example, what types of
loans are available from a given institution? Does the lender make
privately or federally insured or guaranteed loans? Some lenders offer
mortgage loans backed by a federal agency such as the Federal Housing
Administration (FHA loans) or the Department of Veterans Affairs (VA
loans). Loans that are not government-insured are called conventional
mortgages. Insured mortgages may be more attractive than conventional
mortgages in some ways--such as lower down payment requirements. But
they may be more restrictive in other ways; for example, they may
be available only for certain kinds of homes, or for properties whose
value is below a specified price.
Other factors important to your mortgage
decision are the length of the loan and the down payment required
by the lender. The longer the term and the larger the down payment,
the smaller your monthly payments will be. The interest rate is important
too, and in some cases the amount of the down-payment will influence
the interest rate that you pay (the larger the down payment, the lower
the interest rate). In addition, mortgage loans may have interest
rates that will stay fixed for the life of the loan (fixed-rate mortgages),
that may change (adjustable-rate mortgages, or
ARMs), or that represent a combination of fixed and variable rates
(convertible mortgages). The initial rate of an ARM is generally lower
than the rate available on a fixed-rate mortgage; but remember, the
rate may change during the lifetime of the loan. Don’t hesitate
to ask the lender how one loan differs from another, how the different
features of the loan will affect the mortgage, or whether your chances
to qualify would improve if you made a higher down payment.
When you're shopping around, you will
find that some home mortgage lenders have special programs to assist
veterans and low-income or first-time home buyers. Ask the lender if
such programs are available.
If you still need help, Allie Mae can
assist you. You can apply with an Allie
Mae approved lender or contact us for advice.
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