Home Mortgage Loan: Where to go to get the best deal

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Home Mortgage Loan: Where to go to get the best deal.

Choosing the best home loan in many cases comes down to choosing the best loans officer, and not the institution.

If you go to a particular lending institution and ask the loans officer "Who offers the best loan package?", the officer will probably recommend the institution they are working for. And when that loans officer moves to a new company, they will probably state that the best package is from their new company. Hmm. See a pattern forming here.

So what is the best way of finding the best home loan?

You can contact traditional sources such as Banks, Credit Unions, Savings and Loans, or Mortgage Bankers. All of these institutions have their strengths and weaknesses, and you may be satisfied with your search. But remember, in most cases, they are trying to "sell" their own programs, and will not inform you of a potentially better home loan, because it is a conflict of interest.

This is where a Mortgage Broker comes in, either through traditional channels or on the Internet. Their major strength is that they can shop the market for whichever lender has the best rate. (And this is faster and more effective than you can do on your own). They can also handpick a particular home loan lender that suits your needs exactly, and if that submission is declined, they can simply repackage the loan and submit it to another lender. Once again though, make sure you do some homework yourself to make sure that you're getting the best rates. You don't want to find out that your mortgage broker has a "greedy" loans officer who is finding the best deal, then charging you a higher service fee, which nullifies the lowest rate.

Ok, you’ve gotten yourself approved, now what...

You’ve gotten yourself approved, and now you need to decided which type of mortgage is right for you.

The type of life you lead (or you wish to lead) should have a bearing on your decisions. Below is a brief outline of the 4 different types. (To get a full explanation of these mortgages, talk to your mortgage lender or lawyer).

1) The Fixed Rate Loan is where the interest rate stays the same for the entire length of the mortgage. If you plan to stay in your house for 15-30 years, this could be a good option because the monthly payments are easy to budget and your payments are predictable.

2) An Adjustable Rate Loan starts with an interest rate which is normally lower than a conventional fixed rate loan, and after a specific period of time (ie 3,5,7, etc years), the rate will change to whatever the current market conditions dictate. As the rate changes, your monthly payment changes. So if you feel that you’re in an abnormally high interest rate period, and you think that in the upcoming years the rate is going to drop substantially, you may wish to try this option. With this option, you may feel safer if your mortgage is for a shorter period of time. And sometimes these loans have a limitation on how much an interest rate can go up or down, thus once again protecting you.

3) Jumbo Loans are for people who need large amounts of money.

4) And finally, there are home mortgage loans for first time home buyers. You can maybe take advantage of FHA or VA government loans based on your income or property location. You may be able to qualify with less income and incur no down payment.

When choosing your home mortgage loan, the things to consider are

1) how many years do you want the loan to last,

2) how much can you afford to pay each month,

3) your spending habits,

4) your anticipated income over the term of the mortgage, and

5) how long do you plan to stay in the home.

And remember, the shorter your mortgage term, and the higher your monthly payments, the more you’ll save in interest payments.

About The Author

Jennifer Fountain is a successful freelance writer providing helpful tips and advice for consumers on new mortgages, loans, and financing.

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