Partner Article

Why It Pays to Compare Home Loans

You made the decision to buy a new home, and the first thing you should do is secure your loan. Don’t rush into a loan without shopping around first. Be sure to consider how much you can afford to pay for a house before you start looking. You are about to make a large financial commitment, and if you are a first-time homebuyer it can be stressful and confusing. The wise solution is to do comparison shopping, and look for the best deal. Before you make you final decision on which loan is the right one, ask yourself the following two questions.

Do You Want A Fixed-Rate or Adjustable-Rate Mortgage?

There are two types of home loans you can look into. The fixed-rate locks you into an interest rate that will be paid for the lifetime of the loan. Insurance and property taxes can change, but the principle and interest portions of your loan remain constant. With an adjustable-rate mortgage, your interest will fluctuate over the lifetime of the loan. An introductory period will allow the rate to remain steady for a set amount of time, which is generally between two and five years. Following the introductory period the interest amount will changed based on the rate index the bank chooses.

Are You Qualified For Any Special Mortgage Programs?

Some people qualify for special programs that reduce the cost of buying a home. Always check to see what program you might be eligible for before you choose a mortgage plan.

. Veterans Affairs (VA) loans are available to active military members and veterans. If either you or your spouse is in (or has been in) the military, you may be eligible for a loan with no down payment and mortgage protection in the event you fall behind on a payment or two.

. Federal Housing Administration (FHA) loans offer low down payments and are available to most people. First-time buyers like them because they are more accepting of low credit scores than other lenders.

. United States Department of Agriculture (USDA) loans are available for people who live in rural areas of the country. A USDA loan can offer a low down payment and sometimes no down payment mortgage. They can also help with closing costs. Similar to the VA, the USDA loan can offer some help if you fall behind.

Having this mortgage information before you start looking for a loan will help you with comparison shopping and make sure you get the best deal available.

This was posted in Bdaily's Members' News section by Alex Brown .