When buying or refinancing a home, it’s essential to select the correct loan type. Your monthly payments, interest rates and overall cost of ownership will all be affected by what type of loan you select.
Finding the best mortgage rate is essential for keeping your payments low over time and avoiding paying unnecessary fees like PMI or discount points. It’s also beneficial to know your options for government-backed loans such as FHA or VA.
Credit scores of 580 or higher are usually required for these loans, however you don’t need to put down as much cash as with a conventional loan. However, you may end up paying higher interest rates than if you used a private lender.
Some lenders provide special programs tailored towards borrowers with low credit scores, making it easier to qualify for a home loan. Carrington Mortgage Services, for instance, offers various mortgage options designed specifically with this in mind.
Another viable option is Rocket Mortgage, which provides an online lending experience that’s user-friendly and requires no paper documents. It also has a comprehensive selection of mortgage products as well as excellent in-person or phone support.
Rocket Mortgage is an ideal option for borrowers with bad credit, offering low down payment and closing cost assistance. Its flexible terms and low minimum credit score requirements set it apart from its rivals.
Its fully online mortgage process makes it ideal for military personnel deployed overseas, and because it specializes exclusively in VA loans, it is better equipped to meet the unique needs of veterans and their families during the home-buying process.
When looking for a mortgage, be sure to explore all available options and ask questions about costs and fees. These can range from prepayment penalties and origination charges, to discount points and upfront mortgage insurance premiums.
Saving at least 20% on your down payment can help lower your interest rate and eliminate PMI (Private Mortgage Insurance), a monthly fee that adds onto the cost of borrowing. Some mortgage programs allow for up to 2% discount points, which could mean substantial cost-saving in the long run.
When looking into loans, a fixed-rate mortgage might be wiser than an adjustable-rate one. This is because with a fixed rate mortgage, your interest rate remains constant throughout its entirety, unlike an adjustable rate loan which could change at any time in the future.
You may want to consult a real estate agent for the best mortgage lender that works with their clients. Many agents have an established list of recommended lenders and they can direct you towards those offering competitive rates and other features.
If you’re a first-time homebuyer, a 15-year loan might be your best bet for lower monthly payments and reduced interest rates. On the other hand, if you plan to stay in your house for several years, a 30-year loan might be more suitable.