If your credit score is at least 680, you can choose from many different home loan options. Basically, you can pick your own terms, but you should look for the best financing package. That means you need to look at the costs, terms, and lenders of the loan.
Paying for Costs
Conventional loans, which include both fixed-rate and adjustable-rate mortgages, have the most competition. This means that the rates for these kinds of loans are the lowest. If you put down 20%, lenders will be lining up to give you money.
With a fixed-rate home loan, you know that your interest rate won't change. The interest rate on your mortgage will stay the same for the whole time you have it. You can also lock in the low rates we have today. You can always refinance your loan if rates go down.
An ARM gives you lower rates, but there is a chance that they will go up in a few years. This type of financing can save you hundreds of dollars in interest if you plan to move in a few years.
You can also choose a mix of the two, which gives you low rates at first but locks them in after a few years.
Terms
Less interest will be charged on a loan with a shorter term. But with the short term, your monthly payment will be more. Most mortgages are for 30 years, but you can also get a mortgage for 25, 15, or even 10 years. You should choose terms based on how much you can pay each month.
Lenders
Most of the time, traditional lenders offer the best loans, even if you need an unusual loan. Conventional lenders can handle both jumbo mortgages and mortgages for people with bad credit. They'll find underwriters, which will make your home loan interest rate a little bit higher.
Still, you should look into all of your loan options. Start by getting quotes on rates for a certain loan amount. This way, you can compare numbers that are the same. Also, check the fees to make sure that the money you save on interest isn't wiped out by high closing costs.
Once you've chosen a lender, ask for a bid. At this point, the lender will look at your credit history and give you real numbers. Don't be afraid to back out of the deal if you don't like the terms. You can choose from a number of lenders.
