How To Shop Around For A Mortgage, Part Two

Stone Bridge Mortgage_Mortgage Broker vs Bank Lender

 

Gresham first-time home buyers may feel daunted with all that the information that comes along with buying a home. However, Gresham home buyers shouldn’t feel overwhelmed. By carefully educating themselves, they can ensure that they get the best experience when shopping for a home. Stonebridge Mortgage Group is eager to help our Gresham clients understand the ins and outs of mortgage.

Keep in mind that shopping around for your mortgage is important. Just like you wouldn’t settle on the first house you saw, you shouldn’t settle on the first mortgage you discuss with one lender. Shop around and do your research to find a mortgage that truly works for you.

To aid in shopping for your mortgage, here are a few more terms you should know about when shopping for a mortgage:

Interest Rates

To make sure your mortgage is affordable, it is crucial to get the best interest rate possible. Do your research to find out what the latest mortgage interest rates is before seeking out a mortgage lender. This means you will know what to expect and prepares you for potential negotiations. For example, if you know that the national interest rate average is around 4.5% in the morning and a particular lender offers you 5%, you know you have room to negotiate. Get quotes from at least four lenders to compare your options, but make sure you are comparing rates on the same types of loan.

Points

When speaking to potential lenders, ask about how many points you will have to pay to obtain the specific interest rate. Mortgage points are pre-paid interest. One point equals 1% of the loan amount. The more points you pay upfront, the lower your loan’s interest rate. This can be beneficial for Gresham home buyers in the long run.

Annual Percentage Rate (APR)

Although some people use “APR” and “interest rate” interchangeably, your APR is something very specific. Your Annual Percentage Rate shows the true cost of obtaining a loan, including points, the interest rate, broker fees, and any other charges. Ideally, Gresham home buyers want to aim for an APR that is as low as possible, because a lower APR means you are getting a better deal.

After taking into consideration the type of loan, interest rate, repayment terms, and APR Gresham home buyers can sit down and make the choice about which loan is best.

Locking In Your Rate

The next step for Gresham home buyers, after finding a mortgage loan that suits them and receiving preapproval, is to ask the lender to lock in the interest rate and provide you with a document in writing that states the interest rate you locked in, the number of points you must pay, and how long the interest rate will be locked in before the offer expires.

This is a way to secure your mortgage being what you need it to be. Locking in an interest rate means that even if interest rates rise within the specified time that you were guaranteed, you can still option a mortgage loan for the lower rate that you locked in. However, this can also work the other way. Should the interest rate lower within that time, you could be stuck with a higher rate. All things considered, though, it is generally a wise idea if to lock in your interest rate if you are serious about purchasing a home soon.

After all of the above, it is time to shop around. There are a variety of ways to shop around for a mortgage in today’s market – whether it be by going to an independent mortgage broker, calling local banks and credit unions, or shopping online. Carefully consider your options before committing. If you have any questions about mortgages, you can always rely on Stonebridge Mortgage Group for help.

Stonebridge Mortgage Group Offers Guidance On All Mortgage Matters

Stonebridge Mortgage Group serves the greater Portland area and is located in Gresham, Oregon. Don’t wait to get quality assistance with buying your home!

Call us today at 503.661.5580

 

How To Shop Around For A Mortgage, Part One

Stone Bridge Mortgage_Mortgage Broker vs Bank Lender

 

Most home buyers, even beginners, know that you don’t settle on the first home you find. You’re meant to shop around. Something else Gresham home buyers may not know, however, is that it’s wise to shop around for a mortgage, too. Finding the right mortgage loan is incredibly important. Choosing your mortgage has a big impact on your finances for the foreseeable future.

Gresham home buyers should consider all of their mortgage options before settling on just one. Here’s a quick guide to understanding mortgages as you start shopping around:

The Stages of a Mortgage Application

  1. Pre-qualification: Before shopping for a house, Gresham home buyers should get a mortgage pre-qualification letter. In today’s competitive housing market, a pre-qualification letter lets your Realtor and other potential sellers know that you are serious about looking for a home. It acts as an assurance that you have the ability to by the home you are interested in. Remember that having a pre-qualification letter does not mean you’re approved for a mortgage. These letters informal and optional, but they just might ease sellers’ fears that financing will fall through if they accept your offer.
  2. Pre-approval: Gresham home buyers can get mortgage pre-approval after putting an offer on a home. Getting a pre-approval involves submitting a mortgage application to the bank. The bank will run your credit and research the home you want to buy. If you meet qualifications, they’ll give you pre-approval. This means that if all the conditions are met, the bank agrees to finance the home.
  3. Closing: This is where the mortgage is finalized and you become a homeowner.

Loan Types

The four most common types of institutional mortgage loans include conventional, FHA, VA, and jumbo mortgages. Gresham locals looking to buy a home should first research which types of loans they qualify for and which would be best suits your needs. Each type of loan has benefits and drawbacks.

  1. VA loans are guaranteed by the Department of Veterans Affairs. VA mortgages require as little as no down payment, but they are only available to qualified veterans.
  2. FHA loans are backed by the Federal Housing Administration and require as little as 3.5% down if you qualify. For Gresham home buyers who have trouble putting back savings, this can be a good option. The drawback, however, to putting less than 20% down payment is that you will be required to pay private mortgage insurance (PMI), a monthly payment used for security in case of default.
  3. Conventional mortgages require at least 20% down and don’t require PMI. Generally, a conventional loan the best choice for Gresham home buyers who have enough money in savings to cover the down payment and associated closing costs.
  4. Lastly, jumbo mortgages must be used if you are financing more than conventional conforming loan limits. Due to their amount, these loans have special restrictions and credit requirements.

Repayment Terms

Your repayment term is the term over which you pay back your mortgage. The two choices Gresham home buyers have for repayment terms include a fixed interest rate mortgage, where the interest rate remains the same over the life of the loan, or an adjustable interest rate, where the interest rate can decrease or increase at specific intervals such as annually.

  1. Fixed-rate mortgages tend to be a safer option, especially for Gresham families who plan on staying in a home for more than a few years. There are many different mortgage terms to choose from, such as mortgage terms of 15, 20, or 30 years. 30 years is the most common mortgage rate terms and keeps your monthly payments low. However, while monthly payments on a 15-year mortgage are higher, you ultimately save money because there is less interested accrued over 15 years than over 30.
  2. Adjustable-rate mortgages can save you a lot of money if you play on living in the residence a short time. Your interest rate is much lower than a fixed-rate mortgage for the first five or seven years, but will then adjusts to the average interest rate every year thereafter, which could be much higher. If you still own the home, your mortgage payment could go up dramatically, so it is riskier.

Stonebridge Mortgage Group Offers Guidance on All Mortgage Matters

Stonebridge Mortgage Group serves the greater Portland area and is located in Gresham, Oregon. Don’t wait to get quality assistance with buying your home!

 

Call us today at 503.661.5580

 

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