Shopping for a Home Mortgage Loan: Determine Your Needs

Introduction

The first thing that needs to be done before you start shopping for a home loan is to determine your own personal needs. You will need to determine how much of a payment that you can afford and how much of a down payment you have to put down for your new property.

Shop Around for the Best Home Loan Lender for You

After determining your needs you need to start talking to various lenders and brokers and getting information from them. They will run a credit report and find out what your credit score is and this will determine a great deal as to what rate you will be able to get on a loan. You will be able to find out if you qualify for a VA or FHA loan and if not what various loan types and rates are available through conventional loans. Be sure to get information about mortgages from several lenders or brokers. Know how much of a down payment you can afford, and find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information.

Information to Obtain from a Home Loan Lender

The following information is important to get from each lender and broker. Ask each lender and broker for a list of its current mortgage interest rates and how long are the rates good for? You will need to know whether the rate is fixed or adjustable and if it is adjustable how much the monthly payment goes up or down when the interest rate changes.

Points and Fees

You will want to ask about points or fees that will be paid to the lender or broker for the loan and find out what the actual dollar amount is verses just the number of points that you will have to pay.

Additional Fees and Charges

Additional fees that are involved in the underwriting of a loan need to be determined because a lender will give you rates but you need to find out their charges for making the loan. Some fees are paid when you apply for a loan such as application and appraisal fees and others are paid at closing. Many of these fees can be included into your loan but it will increase the amount you borrow and the monthly payment amount. Make sure and understand what each fee is for and exactly how much it will be so that you can compare lending costs.

Summary

You can obtain more information about home loan lending on the Internet and World Wide Web as well as in books and on videos that can be found in major bookstores in the brick and mortar world.