Call us so we can help meet your lending needs.

Call us so we can help meet your lending needs.

5 Tips for Deciding on the Right Loan

Buying a home comes with many emotions. Surround yourself with a team that you trust is out for your best interest and has the expertise to navigate today’s unique needs. Before you get too deep in the search for your dream home, you want to think about the loan you’ll need to lock something down. Here are five considerations when looking at mortgage loan options

How Much Can You Afford 

You already know that you need to get an idea of how much house you can actually afford to buy, but it’s not just about how much you can afford, but how much you want to be paying? Your purchase needs to fit your lifestyle as well as your debt-to-income ratio. It’s generally recommended for your home to be around a third of your income, but every situation is unique. No one wants to be house poor, so be honest about your expenses. 

Determine Your Upfront Costs 

You may need to have some closing costs or a down payment for certain loans. Discuss the options with your lender then come up with a savings goal to meet those needs in a timely fashion. Even if you don’t plan to buy a home for several months, be proactive and get an idea of what your possible out-of-pocket expenses may be so you’re ready when the time comes. 

Length of the Loan 

Thirty-year mortgages are a common loan length, but there are also 10-, 15-, and 20-year options as well. For many younger buyers, 30-year loans are a reasonable choice, but for older buyers, that may not be something you want to opt for. It also may be wise to lower your purchase price a bit and lessen the loan length to pay your loan off more quickly. The length of a loan can be flexible, so talk to your lender about what options work for you. 

Pay Attention to Interest Rates 

Mortgage interest rates can change daily. Your intentions for your purchase can help you decide on whether you lock in your rate immediately or go for an ARM rate. Right now, rates are very low, but your lender can offer advice on predictions of changes on interest rates.  

Get Information on Mortgage Types

This one scares a lot of people. Getting into the nitty gritty of the varying loans becomes full of complicated details and confusing jargon. Our team can help. Conventional loans are optimal for people with good credit and have a decent down payment. VA loans offer 100% financing for military persons. FHA loans don’t require large down payments and are backed by the US Federal Housing Administration. Rural Development loans provide 100% financing, too, but are specific to rural housing areas. Idaho Housing & Finance is a unique loan for our locals—see us for details.