Unless you’re incredibly wealthy, you’re likely going to need to apply for a home loan if you’re wanting to buy a house. And because this process can be long, frustrating, and confusing, it’s wise to come to the table with some foreknowledge about what to look for and what constitutes a great home loan offer.
To help you in gaining this knowledge and feeling confident in your ability to make the right decision, here are three things to consider when looking into home loan offers.
The Type Of Lender
When shopping for a home loan, there are quite a few different types of lenders that you can work with.
According to NerdWallet.com, some of the most common lenders that people will use when getting a home loan include credit unions, mortgage bankers, savings and loans, correspondent lenders, and mutual savings banks. Because each of these options will have different pros and cons, you’ll want to research each one of these options individually to know what’s going to be fit best with your financial situation and your preferred way of getting a home loan.
Weigh All The Associated Costs
Once you know what type of lender you want to use for your home loan, you can then start looking at the home loan options that are available to you through that type of lender. You might have quite a few options to choose from, so it’s good to have a clear picture of what the costs will be for each home loan you might consider taking.
To really be able to compare products, the FTC recommends that you find out all the costs associated with a particular home loan and how those costs compare to other home loan options. Some of the costs that you’ll want to account for include your interest rate, points, fees, a down payment, and any private mortgage insurance you’ll have to pay. By having all this information presented to you for each home loan offer, you’ll be able to make a fair side-by-side comparison.
Know That You Can Negotiate Your Interest Rate
The interest rate you go with for your home loan will tell you exactly how much money you’ll be paying to your lender to loan you the money in the first place. And while getting a low rate is ideal, if your rate isn’t as low as you want it, there are ways you can negotiate this down.
According to Andrew Bloomenthal, a contributor to Investopedia.com, you can use home loan offers from other institutions to give you some leverage in order to negotiate a lower interest rate with the lender you’re wanting to work with. Additionally, if you’re ready to put down a large down payment or you have particularly high credit scores, you can also use these things as leverage to try to negotiate a lower interest rate than the one you were originally offered.
If you want to buy a home soon, consider using the tips mentioned above to help you find the best possible home loan offer available to you.