What Mortgage Loan Program should I choose?
There isn't a single or simple answer to this question, and that is what we are here for. The right type of mortgage for you depends on many different factors:
- Your current financial picture
- If you expect your finances to change
- How long you intend to keep your house
- How comfortable you are with your mortgage payment changing
For example, a 15-year fixed rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed rate mortgage -- but your payments could get higher when the interest rate changes.
The length of time you plan to keep your home is one of the most important factors in choosing a loan. If you'll keep it more than five years and want the security of a fixed payment, a traditional 30-year, fixed-rate loan may be a good option. A convertible fixed-rate loan, which allows you to get a lower rate if interest rates decline, may be even better. If you'll keep your home only a short time, consider an adjustable-rate loan. An adjustable carries a low interest rate in the early years of the loan, so you'll pay less on the house before you sell.
If you have at least 3% of the loan amount to use as a down payment, you may consider the most common type of loan, a conventional loan.
If you have bad credit, you may not qualify for a conventional loan. In this case, you could consider a subprime loan. Like other loans, subprime loans come in many forms based on the terms, loan amount and loan to value ratio you are looking for. In addition mortgage lenders will look at your credit and give you a credit grade, which will help them determine the best loan for your situation. With less than perfect credit, you can expect to pay higher interest rates because of the higher risk associated with making a loan to someone with a poor credit history.
Comparing loans is a question of tradeoffs. If you pay more points, you get a lower interest rate. If you make a higher down payment, you don't pay for private mortgage insurance (PMI). It takes time to analyze your loan options, but it will pay off.
Which is best for you? Our expert Loan Officers can help. Contact us to get started.
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