Now that you’ve decided to buy a home in Tarrant County, it’s time to consider how you’ll pay for it. Mortgages can be complicated, and selecting the wrong one could seriously jeopardize your future. Here are a few pointers for choosing your mortgage wisely.
GET TO KNOW THE OPTIONS
Talk to a friend or relative who’s local in the area and has recently gotten a mortgage– ask if they would recommend their lender and why. Or even better, reach out to your real estate agent (me) or someone else who deals with mortgage lenders regularly (a financial adviser, attorney, etc.) for help with creating a list of lenders. Search the web and research these recommended lenders extensively, being sure to push past the advertising and investigate fees, lock-in periods, and qualification requirements.
15 OR 30?
When it came to mortgages, the emphasis used to be on paying them off as soon as possible. Today, the average debt accumulated per person due to credit cards, student loans, etc. maybe you’re better off opting for the 30-year mortgage instead of the 15-year. This way, you have a lower monthly payment, with the option of paying an additional principal when money is good.
When selecting a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay at closing) in exchange for a lower interest rate. With the rates hanging at historic lows you may want to keep your extra cash in the bank for other investments. However, if you plan to stay in your new home for a long time taking the points could save you money and ease the burden you’ll bear down the road, when you’re investing in a family. Have your lender supply the numbers for both options.
MORTGAGE BANKER OR MORTGAGE BROKER?
If researching mortgage lenders sounds overwhelming, you might consider hiring a mortgage broker to do it for you. A mortgage broker is an independent contractor who pairs you with lenders by scouring available loans to find the one that best fits your needs. As with your realtor, be sure to research your mortgage broker upfront and get everything in writing.
Not sure which steps to take next? Read our advice on how to minimize financing stress and let us know where you stand in the process of choosing a mortgage for your new home so we can help you move forward!