Comparing Mortgages: How to Find the Right Payment Plan for Your Family
Saturday, February 15, 2020, 6:00 AM | Leave Comment
One dream most people have is to someday own their own home they can live in with their growing family.
However, buying a home itself can be complicated. Most of this complexity comes from the different options for buying a home via a long-term loan known as a mortgage.
Finding the right mortgage can be difficult and time consuming.
Below are some tips on how to compare mortgages so you can find the right payment plan for your family.
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Consider Getting Pre-Approved
You should choose your mortgage first before you find a house. While that order may seem illogical, it really is the best way to buy a home. This will allow you to know exactly how much you will be approved for by the lender, so you can tailor your home shopping appropriately.
This is vital, because it’s easy to get caught up in the excitement of finding the perfect home. However, when you solidly know your limits, you can look through single-family home listings without worrying that you won’t be approved later or that your expected funds will fall through.
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Consider the Term
When you are comparing options for a mortgage, one of the first things you need to consider is the term of the loan. The term refers to the exact period of time it will take to pay off the mortgage. The most common loan terms for mortgages are 15 or 30 years. Paying for a long-term mortgage will translate into lower monthly payments.
However, the interest rate for long-term mortgages will usually be higher, resulting in a higher total cost.
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Consider the Interest Rate
The interest rate on a mortgage will vary from loan to loan as well. There are two different kinds of interest rates for mortgages you will need to consider. These are fixed rate mortgages and adjustable rate mortgages.
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Fixed rate mortgages have interest rates that do not change for the term of the loan.
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Adjustable interest rates can fluctuate over the term of the loan and are probably a better choice when interest rates are high and likely to fall in the future.
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Consider the Loan Type
In addition terms and interest rates, there are also other loan types you need to consider when you compare mortgages. Conventional mortgages involve you obtaining a loan from a lender like a bank or credit union. However, you may be able to find a better deal through a government agency. FHA, Federal Housing Administration, mortgages require smaller down payments and are made available to people with lower credit scores. Veterans can get a similar mortgage through the Veterans Administration, and people in rural areas may be able to get a mortgage through the Department of Agriculture.
Take your time shipping for a mortgage. There are many different kinds of mortgages to choose from, and you want to find the one that will fit you and your family best. Do plenty of research so you can make the best informed choice possible, because a mortgage will likely be the biggest loan you ever take out.
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