There are a variety of mortgage programs available today and it’s important to work with a mortgage lender who will offer you a variety of loan programs that will get you into the right program with the right payment.

Hello, this is Michael Anthony O’Connor with Community Home Funding, Inc. and in this video, I am going to share how to compare loan programs to make sure you are getting the right one.

Here are some other key factors to consider when trying to find the right home loan beginning with loan term.

LOAN TERM

Lenders offer mortgages in a variety of loan terms, including 15, 20 and 30-year fixed terms.

Thirty-year mortgages are the most popular because the monthly payments are lower than with a 15 or 20-year loan. However, you pay a lot more interest over 30 years than you do with a 15 or 20-year loan.

Lenders also charge lower interest rates on a 15-year mortgage compared to 30-year mortgage rates because you’re repaying the loan in a shorter time frame.

Next, look the type of interest rate you are getting.

RATE TYPE

With a fixed-rate loan, the interest rate doesn’t change as long as you have the mortgage, so your principal and interest mortgage payments are predictable.

The rate on an adjustable-rate mortgage, however, can change over time. Usually, lenders offer a low introductory rate and, after a set period (usually three, five, or 10 years), the rate adjusts to the market rate, which could be higher (or lower) than today’s rates. After that initial loan reset, the rate may change annually.

Next, you’ll want to look at the size of loan you are getting.

LOAN SIZE

If you are getting a loan that is over the standard conforming loan limits, then you need a jumbo mortgage.

Buyers with good credit scores and a sizeable down payment may qualify for a jumbo mortgage and may be able to select from fixed-rate, adjustable-rate, and interest-only loans.

Knowing what the loan limits are in your area can help you to get the best rate. Often jumbo mortgage loans come with higher interest rates and more stringent underwriting and appraisal requirements.

LOAN PURPOSE

Knowing what the purpose of your loan will allow you to get into the right loan program.

Do you want a mortgage to buy a new house, or do you want to refinance to take cash out of your house? How you plan to use the financing will dictate your loan options.

OCCUPANCY

Are you buying a primary home where your family will live, or are you buying an investment or vacation property? The qualification guidelines tend to be more stringent for the latter options.

WHAT TYPE OF HOME LOAN CAN YOU GET? 

Borrowers have numerous options to choose from when they shop for a home loan.

Besides the standard loan types like conventional, FHA, VA, and USDA, you will want to check with your mortgage lender to find out what additional types of programs they offer. Often, they will have loan programs that may be a better fit for your especially if you are self-employed.

Remember to know what you are getting and also what fits into your long-term financial plans.

Always work with a professional state-licensed mortgage originator.

This is Michael Anthony O’Connor with Community Home Funding, Inc., thanks for watching. If there is anything we can do to help you find the right loan program, please do not hesitate to contact us.