Choosing the Right Mortgage Loan Programs

What type of mortgage product or program is right for me?

No two home buyers are treated equal. It’s a fact that every home buyer has different goals and needs, different financial situations and limitations, differing tolerance towards interest rate fluctuations, therefore, it is often necessary for home buyers to consult a mortgage loan officer, and to enlist the mortgage professional’s help in choosing the right mortgage product for their particular situations. For example, a home owner who is financially conservative, certain that he will keep the house for an extended period of time, has stable income, would most likely benefit from a traditional 30 year fixed mortgage. But the same fixed rate mortgage is usually not suitable for a home owner who intends to move within the next several years, or has income that fluctuates from month to month. Obviously, there are other specifics and much more information is needed to make an educated decision on what type of mortgage is right for a person, but the following should provide a basic idea on how picking the right mortgage program.

Here are a several questions that will help determine what might be the best mortgage for you:

    • How long am I likely to live in this home?
    • How stable is my employment and income?
    • How much cash do you plan to put down?
    • Are you comfortable with the possibility that your interest rate could adjust in a few years?
    • Do you want the lowest interest rate, or the lowest payment possible
    • Do you have a young family or planing on starting a family?

The process of finding which mortgage is best for you is not a difficult task. Start with listing all the goals you want your new loan to accomplish such as; low monthly payments, pay the loan off as quickly as possible, cash flow, lower closing cost, and so on… Then give that list to your mortgage loan officer. Have the mortgage loan officer work up several different loan programs. Review each proposal and find which loan accomplishes the most goals. Make sure you work with a trusted mortgage professional. They will assess your needs and create a mortgage plan that is right for you.

To determine which mortgage program is right, you must assess how long you plan to live in the property and how much you can afford (pre-qualifed). An option to consider is the length of the term; 15, 30, or 40 years. When your listing those goals, you have to be really honest with yourself. If you decided that you are going to live in that house for 30+ years, then maybe you should consider a different mortgage that lets you invest. Most young buyers or first time home buyers stay in their home for average of 5-8 years. Each family situation is different but depending on the circumstances they usually upgrade to a bigger size home or a home with better amenities.

    • If you are likely to live in your home for 7 or more years, then a fixed interest rate may be your best choice.
    • If your income fluctuates and is not very stable, you may want to consider an interest only loan. During times when money is tight, you will only be obligated to make the interest payments on your loan. You can pay more than what is due when your income is steady. 
    • If you are not putting any money down, you may not have enough equity to refinance in a few years without out of pocket costs. You may want to consider a fixed rate.
    • You will have the option of refinancing, but you will not be forced to. Interest rates are relatively low right now. In a few years, they could be considerably higher. If you are not confident that you will be able to afford higher payments or refinance when your fixed interest period ends, a fixed rate mortgage may be your best bet.
    • For most investors, having positive cashflow is very important. These investors prefer loan programs with minimal monthly payments such as loans with “interest only” features, Adjustable Rate Mortgages with a lower starting rate are ideal for these type of borrowers.

You must determine what is more important to you. Interest rate or payment. Different loan programs offer different interest rates. The more information you give to your loan officer, the better they be able to help you to determine what loan program is right for you.

My team and I are here to listen to your needs and help determine which loan programs is best for you. To learn more about the pre-qualification process or to get pre-qualifed “click here” or contact me.


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