What You Need To Know About Shopping
So you need a mortgage. It’s either to purchase a home or refinance an existing one. The process can seem overwhelming; so complicated and overloaded with paperwork. In any case, consumers must understand what they are signing up for considering the significance of the investment.
It is important to know your fico score when shopping for a mortgage since a higher score commands a lower interest rate and more options. This brings me to your credit report. Everyone should know what is on their credit report and any mistakes should be removed promptly. Try to pay more than the minimum balance on your credit cards even if it is only a few dollars more. And,
Ok, so now what type of loan do you need? It seems that there are so many different interest rates and payment options, but it really all comes down to two. The fixed-rate and the adjustable rate (also know as an ARM). ARMs will stay fixed anywhere from 1 month to 10 years and after this fixed period expires, the rate will begin to adjust to meet the current interest rate. A fixed-rate is locked in for the life of the loan. It is my opinion that when fixed-rates are low, like they are now, one should opt for the fixed rate. However, everyone’s needs are different. A 5/1 ARM, for example, might make sense because its rate could be a ½% lower than a 30 year fixed. And, statistics show that a first-time buyer is more likely to move or refinance within the first five years vs. someone buying their third or even fourth house. Don’t just take the lowest interest rate, there is so much more to the story and it is not just the rate in question. Beware of low, introductory rates, pre-payment penalties and/or other fees and points that could amount to thousands of dollars that are “rolled” into your mortgage balance. Look at your whole financial picture and what your new monthly payments will be.