3 Questions When Shopping for a Mortgage

     Purchasing a home loan is a big deal.  As with any purchase, shopping around and doing a little research is what’s going to get you the better price and the better quality product.  However, according to nbcnews.com, “Almost half of consumers seeking a loan to purchase a home do not shop lenders.” When shopping for a home, there isn’t a single buyer that would say “Any old two bedroom will do!”  So why the lack of interest when deciding on where your money will be going for the next 30 years?  While mortgages can seem intimidating, ignorance is not bliss in this particular case.  Here are some questions to ask while seeking the best Mortgage product for you.

What’s the difference between fixed and adjustable rates?

     Generally speaking, a fixed-rate mortgage locks you into one rate over the life of the loan while an adjustable rate mortgage fluctuates based on market interest rates chosen by the bank (duh!).  However, for adjustable rate mortgages, there is typically an introductory period ranging from one to ten years where your interest rate will hold steady.  In the current Richmond market with interest rates still so low, a fixed rate mortgage is ideal.  But for first time home buyers who generally move before the life of their mortgage is over, an adjustable rate mortgage may be a good option— especially if they have a lengthier introductory period.

What are Points?

     Points are upfront fees that a homebuyer can purchase to lower their interest rates.  It is generally recommended if you are planning on staying in that home for a long period of time.   You can also get negative points, which means upfront fees are reduced in exchange for a higher interest rate.  It’s important to consider your long-term costs when determining which way to go.

Do I qualify for any special programs?

VA Loans— For active military or veterans, VA Loans offer little or no down payments and protection if you are no longer able to make monthly payments

FHA Loans— Also a product offering low down payments, but open to the public.  Very attractive for first-time buyers, offering a more forgiving credit score standard than traditional loans.

USDA loans— For purchasers in rural areas, USDA loans offer a little or no down payment mortgages, help with closing costs, as well as assistance if you fall behind on payments.

HUD— There are lots of options for first time home buyers, visit HUD.gov for assistance programs in Virginia.

     Ultimately, shopping around will help you to get a cheaper loan, which in turn will build equity faster! Get the mortgage that’s right for you and talk to a mortgage professional today!