Home loans - what you need to know

You have probably heard it said many times… and in most cases it's very true…
"NO LOAN = NO HOME"!

Since most home purchasers generally need financing to buy their new home, it is important for you to understand what it takes to get a home loan, where to start your search, what types of loans are available, and how to determine which loan is best for you.

We will try to answer many of these questions here. Of course, every situation is different and we cannot cover every possibility here. Our suggestion is that you read and learn as much as you can about the home loan process and then, armed with this information, visit your local lender or mortgage broker, and talk to them. After all, they are the experts and will know exactly what can be done in your situation.

Kent sez: “If you are looking to purchase a home in the Antelope Valley, we are able to direct you to the lender with the lowest interest rates and best products for your circumstances. Just give us a call and we will help you find the best home loan for your needs!”

Now, back to “Home Loans 101 – An Introduction to the maze of home financing!”

Shopping for a mortgage can be quite an overwhelming experience. Especially if you are a first time homebuyer and have little to no knowledge about the loan process. If you have shopped online you have already found hundreds of mortgage sites quoting low rates for every loan term under the sun. One would think that if you just spend a few hours online you will find the lowest rate available and receive the best deal. This is rarely the case.

Kent sez: “Don't play the interest rate game without a load of information! Read this first!”

Not all low rates are considered equal...

There is a lot more to the cost of a loan than the interest rate. Many lenders will set the interest rate as low as possible and then hike up the number of points and/or fees attached to the loan once you have applied. Most online mortgage lenders will post the number of points next to the interest rate for your consideration. One point is equal to one percent of the total loan amount.

To ensure the best deal, compare the Annual Percentage Rate (APR) of the loan that includes the interest rate, points/fees and closing costs. If you compare companies using this percentage you will find that a lot of the low rate lenders are not the best deal in town.

What?!! I don't qualify for that rate?!!

The most important thing to learn about mortgages is that rates are based on your individual needs and financial situation. The rates quoted over the phone and/or online are not always accurate representations of what you will qualify to receive. Most rates quoted are applicable only for individuals with perfect credit, a low debt to income ratio and either a large down payment or a lot of equity in their house.

These qualifying factors are crucial elements to be aware of before shopping for a loan:

CREDIT

Your credit history is important to lenders when evaluating your loan. An individual with many late payments will not be deemed as trustworthy for payment terms as someone with perfect credit.

DEBT TO INCOME

Lenders use your debt to income to verify that you have the means to pay a monthly mortgage.

DOWN PAYMENT

There are several loans available with little to no down payment; however, most of these loans come with a higher interest rate. Evaluate your finances and estimate the maximum amount of money you can afford to put down on your new home. The higher the down payment, the lower the interest rate!

EQUITY

If you are looking to refinance, receive a home equity loan, consolidate debts or make home improvements then you need to know how much equity you have in your house before you apply. Most of the time, the more equity you have the more money you can borrow.

Are you confused yet? Don’t really know where to start?

To make things a little easier we have prepared some loan tips that will help you shop for the right loan – without the hassle of not knowing what to do! Got more questions? Just send us an email or give us a call and we'll be happy to answer them.