It's not easy to get a good mortgage because you have so many options. Even worse, each one might have so many different options that you might think it was made to be confusing on purpose. Here are a few things you need to know to help you make your choice.
Sit down and think about what you want before you go out and start looking. How long you want to take to pay off your mortgage is one of the most important things to think about. You save much more money in much less time. Most mortgages are for 30 years, but you can also get them for 15, 20, 40, or even 50 years.
The next thing you should do is keep an eye on interest rates on the market for a while. By watching how they rise and fall, you'll know when it's a good time to get a good rate. It will also tell you whether you should get an adjustable rate mortgage (ARM) or a fixed rate mortgage. Don't just take the lender's word for it. You can always refinance in the future if you make a mistake or if the economy changes in a big way.
When interest rates are going up, or if you just want something stable that won't cause you trouble later, a fixed-rate mortgage is the way to go. You always know how much your payments will be with a FRM. A mortgage with an adjustable rate, on the other hand, will give you lower rates when interest rates are low, but it can be hard if that changes.
Lenders will sometimes tell people to get an ARM because it will let them buy a bigger house. Even though this is true, it doesn't mean you will be able to make the payments once the part of the mortgage with the adjustable interest rate starts. Prime lenders require that you have no more than 36 percent of your income going toward debt. This is a good rule of thumb for keeping your finances in good shape.
Watch out for mortgages that make a lot of promises. Even though they may do what they say up front, what you don't see can be a problem. It's a good idea to learn about the different kinds of mortgages so you can be a smart shopper. When it comes to some mortgages and some lenders, there are some real traps.
You should also get several quotes from different lenders so you can compare them. Check out the different fees, the total cost, the interest rate, and other things. You'll find out quickly that not every lender offers the same deal. You won't have to look long to find one or two that stand out. Then you can choose the one with the best deal.
Then you should see if there are any ways to save more money. You can do this by getting out of debt and improving your credit score. Before you apply, you should make sure this is true. You might also be able to lower your interest rate even more by buying points or putting down more money. Make sure you at least think about these ways to save money.
