Looking for the Right Mortgage
Owning your own home provides you with a certain sense of pride and accomplishment. It also gives you a sense of security knowing that you will always have a roof over your head that you can call your own. However, most people are not able to pay the full price for a home with upfront cash. This means obtaining a mortgage loan will be necessary to purchase the real estate. Here are some tips for finding the right mortgage for you.
Decide how much you can afford to pay
It is important that you do not take on more debt than you can really afford. Your price range for choosing a home to purchase will depend on the condition of your personal finances. Your income and other factors will play a role in deciding how much of a monthly mortgage payment would be sustainable for you.
Create goals for saving
You should start saving to make a variety of upfront payments that will be required for obtaining a mortgage. The mortgage lender will require that you make a down payment before lending you the funds to purchase the real estate. There will also be a variety of closing costs that you will have to pay. Estimating the total amount of these initial costs will give you a better idea of how much you should aim to save.
Length of mortgage term
It is also important to take into consideration the length of the mortgage loan term. The longer the term of the mortgage the more total interest you will end up having to pay. Generally, mortgage lenders will offer loan terms from 10 years to 30 years in length. If you can afford it, it may be better in the long run to pay more upfront for a shorter mortgage term.
Different types of mortgages
Not only will you have to decide on the right mortgage term length you will also have to choose the right type of mortgage. For those with a connection to the military you may want to go with a VA loan. FHA loans are especially designed for buyers with low credit scores. USDA loans are available for some looking to buy in a rural or suburban area.
Interest rates
Mortgage lenders primarily earn a profit for lending you the money to purchase your home by charging interest. How much a lender will charge will depend partially on the current economic environment and market conditions. Also, each lender will have varying policies and standards that determine how much interest they will charge you. The higher your credit rating and income will translate to lower interest rates for you. Various other factors will also be considered by the lender.
Shopping around
It is probably a good idea to do a little shopping around before you make a final decision on which mortgage you will take on as a homebuyer. After doing a thorough financial analysis of your personal circumstances you will have a better understanding of what you are looking for in a mortgage loan. This will allow you to pinpoint the right lender for your needs.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James.
Raymond James Financial Services, Inc. does not provide advice on mortgages.
Raymond James Financial Services and your Raymond James Financial Advisors do not solicit or offer residential mortgage products and are unable to accept any residential mortgage loan applications or to offer or negotiate terms of any such loan. You will be referred to a qualified Raymond James Bank employee for your residential mortgage lending needs.