Thanks to technology, getting a pre-approved mortgage is easier than ever. With just a few clicks, you'll get the coveted "pre-approved" status that will make closing your dream home a reality. But it is important to explore all options before deciding on a mortgage.
Make sure you find the right mortgage company tailored to your specific financial situation. There are 2 common paths you should explore before narrowing down your mortgage lender:
- Traditional lenders.
This type of lender is a traditional banking institution - you can sit down and speak to a loan officer in person. These lenders include banks and credit unions, which help buyers navigate the home buying process. Many traditional lenders offer conventional and government loan options as well as online services. - Online Mortgage Lenders.
Online lenders streamline the mortgage application process by providing clear and easy-to-follow application steps. Online lenders allow buyers to handle all financial inquiries, verifications and approvals online. Online mortgage lenders can also provide access to loan officers who can contact you online or by phone to answer any questions.
Now that you understand the 2 main types of lenders, it is important to understand the different types of mortgages you should consider.
- Government guaranteed mortgages.
This type of loan is considered safer because it is supported by the federal government. Government-guaranteed loans are ideal for low-income people, first-time homebuyers, and people with bad credit conditions. The down payment requirements are generally lower on these loans (generally between 0% and 3%). FHA, USDA, and VA loans are the most popular government-backed loans. - Conventional mortgages.
Conventional mortgages are home loans that are not supported by the United States government. Typically you will need good credit, proof of income, and a down payment of 3% to 20%. Conventional mortgages include fixed rate mortgages (you pay a fixed rate over a set period of time) and variable rate mortgages (you pay a variable rate over a set period of time). - Refinancing, Home Equity Mortgages or HELOCs.
These loans are ideal if you want to refinance or borrow against your home's present value.
It is important to understand current mortgage rates when purchasing a home loan product. This will allow you to make sure that you are receiving a fair mortgage rate from the lenders you are considering and to help you calculate the monthly payment.
The interest rate on a mortgage will vary depending on the term of the loan and whether it is a fixed rate mortgage or a variable rate mortgage. Your home loan officer can help you decide which mortgage term and loan type are best for you and provide you with an estimated monthly payment for each.
Also Read: 5 Tips for Finding the Best Mortgage Lender