Americans broke mortgage records in 2021. Lenders disbursed $1.61 trillion in home loans.
You’d have to go back to 2005 for the previous record. That year, Americans borrowed more than $1.15 trillion to buy homes.
That reflects the craziness of the real estate market and the increase in home sales prices. The market doesn’t show signs of slowing as we enter 2022.
You’re going to have to do more homework to find out which mortgage products are right for you. The wrong mortgage could leave you paying more for your home because of interest rates and fees.
How can you make sure that you get the right mortgage? Read this mortgage product guide to find out.
1. Look at Your Needs
Do you know how much you can afford to spend on a home? How much money do you have to put down?
Answer these questions to get a basic idea of your mortgage needs.
Look at your credit report. Do everything you can to bring your score up because it improves your chances of getting approved at a lower interest rate.
You don’t have to have a crystal ball to predict the future, but you should have an idea as to how long you plan to stay in the home.
2. What Mortgage Products Are Available?
There are dozens of mortgage products available. Government agencies have home loan programs where they guarantee the loan.
Consider these programs if you’re a first-time homebuyer, veteran, or plan to buy a home in a rural area.
Conventional mortgages aren’t backed by government agencies. There are two main types of conventional loans: conforming and non-conforming loans.
What type of interest rate would best suit your needs? A fixed-rate locks your rate at current rates for the life of the loan, whether you have a 15 or 30-year mortgage.
Since interest rates are at their lowest levels, it makes sense to lock in a fixed-rate mortgage.
Adjustable rates reset the interest rate throughout the life of the loan. This means your payments can go up or down according to what the interest rates are.
3. Find a Lender
Mortgage lenders offer different products, different rates, qualification standards, and services. Shop around with different lenders to find the one the best meets your needs.
Prequalify for a loan to understand the qualification requirements and interest rates. Be sure to ask about origination fees and points.
Points get paid at closing. These are fees that should bring down the interest rate to lower your payments.
Be careful with points because it could take a while to break even on the payment.
A Simple Guide to Choosing Mortgage Products
Buying a home is stressful as it is. Figuring out the world of mortgage products only adds to the stress.
This mortgage product guide walked you through the steps to find the best mortgage for you. Assess your needs, look at the types of mortgages available, and choose a lender that you trust.
Head over to the home page of the blog for more helpful lifestyle and financial tips.