The National Association of Realtors report that 35% of those looking for a home are first time buyers. Whether you fall into this demographic, or have purchased a home in the past, you may still have questions about mortgage lenders, and current mortgage rates. It’s estimated from a 2016 study that 59% of homeowners wish they could have a better understanding of their mortgages. It is easy to understand this, as many different types of loans, and mortgage companies exist for you too choose from. While talking directly to a mortgage company can be a good source of up to date mortgage information, here are a few things to use as a starting point.
Mortgage Rates and Payments
How mortgage rates work is something that many people don’t fully understand. A good rule of thumb is that a higher rate will mean more money spent over the life of your mortgage. For example, a $300,000 mortgage with a life of 30 years, and a 3.5% interest rate, will add up to around $484,968. The monthly payments themselves may not be overly expensive, but it is worth noting how much over all the interest rate will add.
You should also be aware if you don’t have a fixed rate mortgage. If your interest rate is able to increase over time, the additional debt can add up drastically if you’re not aware. Sites like this can help you visualize rates in your area, and you can even specify the type, value, and property type, in addition to your own credit score. This can help you get an estimate before you contact a mortgage company.
How To Choose A Mortgage Company
- Make sure your credit score is in good shape. As it goes with car loans, and credit cards, mortgage companies will take your credit score is in the green. A higher score will mean you have a better bargaining position, and the chance of getting a lower interest rate.
- Compare local lenders. The internet has a wealth of resources that can help you make an informed choice when choosing a mortgage company. Comparing the rates offered by these lenders can help you narrow down your search field.
- Read the fine print. Don’t feel pressured to sign anything without fully understanding what you are agreeing to. If you have any questions don’t hesitate to ask. Know that the requirements, fees, and rates are before agreeing to a mortgage.
- Understand the types of lenders available. Common types of lenders you can find are:
- Credit Unions. Financial companies that have the benefit of offering lower interest rates to their shareholders. To take advantage of this type of loan, look into membership options offered by these institutions.
- Mortgage Bankers. These are bankers who work for financial institutions who offer loans which are then considered by the institutions underwriters.
- Savings and Loans. These can be harder to find; however, they used to be the foundation of home lending. The mutual savings banks often operate on a local level, and can be a great choice if one exists around you.
- Mutual Savings Banks. These are similar to Saving and Loans institutions, as they are usually local, and offer competitive rates.
- Correspondent Lenders. These are local mortgage companies that are able to create your loan, but often seek out other lenders to whom they sell your loan too.
- Get pre-approved. Getting pre-approved can help give you a head start over other buyers when making offers on homes. In order to get this approval, you need to give lenders a decent amount of financial information so that they can decide how much you can afford to borrow, and what kind of loan you can get. Some lenders might allow you to complete this process online, while others may require a in person meeting. This process can also help you decide which lender you want to stick with.
If you have any questions, don’t hesitate to ask your mortgage company for clarification.