A home mortgage is an expense you’ll be paying off for some time. Yet plenty of people who are buying a home rush into their purchase without any preparation. You may think all lenders are the same or that you’re lucky to receive a loan. This mentality obscures the real issue: like any other purchase, you can find deals on home loans if you know how to look. Here’s what to keep in mind when mortgage shopping.
1. Shop around. Rates and options vary significantly between different lenders. Pick several lenders and evaluate the rates and packages they offer. Ask a potential lender to give you hard numbers on a 15- or 30-year mortgage (or whatever time span you’re looking at), or use a web-based mortgage rate comparison tool. Compare each lender’s offer and keep an open mind about the long-term savings each type of mortgage offers.
2. Look for down payment help. If you’re interested in buying a home but have little in the way of savings for a down payment, help may be available. Explore options offered by the federal government for those without the cash to afford a typical 10% down payment. The Federal Housing Administration offers much lower down payments for those with good credit. Other federal bodies, like the Department of Agriculture, also offer help for certain types of properties.
3. Don’t be afraid to ask for help. Take advantage of your personal and professional networks when buying a home. Ask anyone in finance for advice on the particulars of your mortgage. Also, talk to people who have paid off a mortgage or recently purchased one. These people are full of valuable advice that can make your mortgage-buying process much easier.
View a mortgage as a purchase, not a loan. When you treat your mortgage as a commodity, your inner deal hunter is likely to appear, and you’ll be more sharply focused on competitive pricing. With just a little work before you buy, you’ll enjoy significant savings.
