Port Lavaca Real Estate
Jennifer Daniels
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How to Select the Right Home Loan

How to Select the Right Home Loan

Most people while buying a home choose to finance their purchase by a loan. These loans known as home loans are very common and are increasingly being used by a large segment of the population. These loans make the process of buying a home very convenient. However, there are several guidelines that the customers must keep in mind while purchasing home loan products.

 

Choosing the Lender

The first step in the process of taking a home loan is choosing the right lender. There are many banks offering home loan products today. You should select the bank which provides the best before sale and after sale service. You should also check with other people who have purchased a home through a lender for referrals. It is best to meet a loan officer in person, and keep in mind that their attitude and attention will most likely be at its best in that meeting. Make sure they can answer all of your questions thoroughly and clearly. You don’t need big or vague dialogue, you NEED facts!

 

Some banks are very customer friendly and provide many extra features and services at no cost. You should check them out before making your decision. It is best to make this decision in the beginning itself, because later, it become difficult to make a change, though it is still possible to do it.

 

 

 

 

Deciding on the terms of the loan

All home loans charge their customers in the form of interest. The interest rate varies from time to time. It is best to check the interest rate at the time of your purchase because that is the rate at which you will be charged for your loan.

 

The interest rates come in two types, a fixed rate and an adjustable rate. A fixed rate of interest is charged at the same rate throughout the duration of the loan. A floating rate interest is variable and can change during the time of the loan.

 

In addition, the customer should also check the duration of the loan. Most loans are 30 year or 15 year notes, and which one you pick is typically decided by income. The longer the life of the loan, the less your monthly payment will be. However, a 30 year note will cost you more in interest over the long run than a 15 year note.

 

The duration of the loan can be changed as well. If the customer has the financial ability to pay off the home loan earlier than the chosen duration, he can do so as long as certain terms and conditions are met. Be sure to ask potential lenders about this, and see if there are any hidden fees for paying off your loan early.

 

Also, there are other fees that you should inquire about: Origination fees, underwriting fees, and mortgage insurance requirements etc.. Make sure you ask a potential lender what fees they will be charging you, and budget accordingly.

 

Getting Pre-Approved

Once you have chosen a lender, and have found a loan program that you are interested in, the next step is to get pre-approved for a loan. This process will not only tell you which programs you are actually eligible for, but also establishes a price range by setting a limit on what the bank is willing to lend you. This limit is based upon a combination of income, credit, current debts and how much cash you have available for a down payment.

 

If you cannot receive loan pre-approval because of credit issues or other financial pitfalls, then DON’T give up there. Many lenders will work with you to overcome these problems. They are common, and can be mended in most circumstances.  

 

 

Start Home Shopping

 

Before taking out a home loan, you should finalize the home that you are going to buy. You should be very clear in advance about the location, size and price of the home. You can decide on the location based on your personal preferences. You can select the price of the home based on your budget and your purchasing power.

 

You should investigate the home by means of a site visit, before actually making the purchase. This can help you to make up your mind faster about the purchase. Once you have made up your mind, you should go ahead with the purchase and the home loan. Most people undergo this process with the aid of a REALTOR because it makes the process smooth and they protect you as a buyer. Also, they are a FREE resource to BUYERS specifically because the seller normally pays the Realty fee.

 

Conclusion

In conclusion, it can be said that a home loan is a great utility. It allows customers to live their dream of owning their own home. Most customers take advantage of this. However, it is advisable to read all the terms carefully and to follow the necessary guidelines before taking the loan. Doing so will prevent unnecessary hassle and inconvenience to the customer.