Buying a home is a big decision. But while most people spend the majority of their time during the home buying process thinking about the piece of property they want, what you should really be spending the bulk of your brain power on is your mortgage.
Getting a home loan means being saddled with a mortgage payment for about the next 30 years. This type of commitment is one that shouldn’t be taken lightly. So to help ensure that you’re getting the best financial deal for you, here are three things to consider when getting a home loan.
Figure Out Which Type Of Lender You Want To Work With
One of the first things you’ll need to determine when getting a home loan is the type of lender you want to work with. Your options for home loans and lenders can vary, so it’s worth it to research multiple options to see which one will work best for you.
According to NerdWallet.com, some of the most common lenders that people work with are credit unions, mortgage bankers, correspondent lenders, mutual savings banks, and savings and loans. While some of these options are more mainstream than others, it’s worth looking into all your options so you can find the one that’s going to fit best with your financial needs and desires.
How Much Risk You’re Comfortable With
Along with figuring out the type of lender you want to work with, you’ll also need to decide what type of mortgage you want. To help you in knowing which choice will likely be the best one for you, you might want to first consider how much risk you’re comfortable with.
Justin Pritchard, a contributor to The Balance, shares that there are mortgage options that are safer or riskier than others. If you’re interested in the safest option, you’ll likely want to pick a 30-year fixed rate mortgage loan. However, if you’re up for taking on a little more risk, you might want to go with an adjustable rate mortgage or something like interest only or negative amortization. But before you decide on one of these riskier loans, make sure you know exactly what you could be getting yourself into should trouble arise.
The Number Of Loans To Apply For
When you’re ready to start applying for actual home loans, you’re going to want to be very strategic about this. While you’ll want to ensure that you’ve found the best rates for the loans you’re considering getting, you also don’t want to take a big hit to your credit by applying for them.
To combat this, Chris Muller, a contributor to MoneyUnder30.com, recommends that you apply for the loans you’re considering getting all at the same time, or at least within a day or so of each other. By doing this, the various inquiries on your credit will have less of an impact on your actual credit score.
If you’re going to be applying for a home loan soon, consider using the tips mentioned above to help you get the best outcome.