3- Do you have military experience?
If you are a veteran or otherwise qualify for the VA loan program, don’t hesitate. Use the VA route. The rates are outstanding, and there is no need for a down payment or mortgage insurance unless 1) you’re purchasing a really costly property, 2) you’ve already used up your entitlement on a prior home purchase, or 3) you have enough money in hand for a 20% or greater down payment. Otherwise, it’s unlikely that you’ll find a better price by looking into Fannie/Freddie/FHA choices.
4- Shop APR rather than rate
Most individuals compare mortgage rates while looking for a home loan. While this is useful, it is also deceptive. Lenders frequently compensate for falsely low rates by charging greater upfront fees, notably by including “discount points.”
Discount points are a method of obtaining a cheaper mortgage rate by paying a portion of the interest in advance. But, there are alternative ways for a lender to compensate for a lower rate by collecting more fees.
This is where the annual percentage rate, or APR, comes into play. It allows you to express the overall cost of the loan as a percentage rate. It’s essentially the rate you’d pay if you rolled all of the loan’s closing costs into the mortgage itself.
While it’s not a precise comparison, especially if you sell or refinance before the loan is paid off, it’s a useful method to make quick, preliminary comparisons when browsing through possibilities. If you aren’t familiar with math, it’s also a useful tool for making a final decision.
Nevertheless, if you’re considering an adjustable-rate mortgage (ARM) instead of a fixed-rate loan, don’t rely just on APR; there are far too many other considerations to consider.
5 – Remove points to compare fees
One of the most common pieces of mortgage advice is to evaluate the costs offered by different lenders. However, this can be problematic since not only can fee levels fluctuate between lenders, but various lenders will use different names for the same price, bundle many fees under one name or split one fee into numerous distinct ones, or not charge for some services while billing for others.
It’s enough to turn your head. Yet there is a simple solution. Simply compare the total costs charged by each lender. After all, the individual charges aren’t as important as the total amount you’re paying, right?
When doing this, make sure to exclude any charges for discount points from your comparison. This is because discount points are a form of fee intended to reduce interest rates, which can throw off your comparison. When evaluating fees, ask your lender initially to present you with an offer that does not include discount points so that you may make accurate comparisons of fees between various offers.