Choose a Lender
Securing finances requires a decision that
you may have to live with for thirty years—so
spend time comparing different brokers before
making your choice. There are a number of ways
to find one, whether through traditional
print ads, Realtor referrals or Internet
sources. There are also several considerations
to keep in mind when shopping for the right
broker and program:
• Price.
Consider the competitiveness of a broker's
prices with that of others, especially for
mortgage rates, interest rates, and additional
costs.
• Diversity of products.
Price is important but by no means should
it be your only determining factor. How
extensive is the broker’s range of
offered loan programs? Check the availability
of the program most appropriate to your
credit profile and property.
• Rapport.
Do your lenders and brokers communicate
effectively and thoroughly? Are they attentive
and prompt? You aren’t looking for
just a guide but a partner—someone
you can work with and trust every step of
the way.
Choose a Loan
Though there are many different
kinds of loans available today, these three
are the most commonly used:
• Fixed
loan.
This long-term option requires monthly payments
that will remain the same throughout the
duration of the loan, which may vary from
fifteen to thirty years. Though it’s
the most affordable short-term solution,
it may cost more than shorter term mortgages
over the life of the loan.
• Adjustable rate mortgage (ARM).
The loan rate here will be determined by
factors such as index, readjustment intervals,
and capitalization rate. The initial interest
rate can be as much as 2 to 3 percent lower
than a comparable fixed rate mortgage, which
can make homeownership more affordable.
However you should first examine variant
factors and downside risks before seriously
considering this option.
• Hybrid loan.
Also known as an intermediate or convertible
ARM, it offers a fixed interest rate for
a specified initial period before it ‘switches’
to an ARM and adjusts with the market every
six months or every year.
Consult with your broker to assess which
loan type and program would best correspond
with your resources and needs.
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