Your home will probably be the biggest single investment you make in your lifetime. Youll be borrowing hundreds of thousands of dollars and paying interest on that amount for the next 15 or 30 years. It pays to shop around for the best deal.
To compare one loan to another, you need to look beyond the quoted interest rate and understand the annual percentage rate (APR). This is the actual cost of the loan, and it must be disclosed on all consumer credit applications.
Some lenders offer low interest rates but charge fees that lenders charging higher rates do not. By comparing APRs, youll be comparing one loan to another, apples to apples, because it takes into account all of the costs of the loan.
The Benefits Of Comparison Shopping
According to Freddie Mac, getting a quote from just one additional lender could save you an average of $1,500 over the life of a loan. Getting a quote from five different lenders will double your savings, on average.
Not sure which lenders to contact? Do your research. Read a few top lender lists by reputable finance sources. Visit lender websites to learn more about the company and the products they offer. Go over customer reviews to make sure you’ll be in good hands after the loan closes.
Rocket Mortgage ® retains mortgage servicing on the mortgages it sells, so youll enjoy the same excellent level of customer satisfaction while repaying your mortgage that you had Idaho installment loans while applying for it. Its not all about price in comparison shopping.
Many people overlook first-time home buyer loan programs and grants when shopping for their first home because they don’t think they qualify or they don’t even know these programs exist. These loan programs and grants make buying a home more affordable and achievable for many people.
You can find all first-time home buyer programs available through states, municipalities and private sources by visiting the Department of Housing And Urban Development (HUD)s Local Assistance Program page. It will take you to all the resources available where you want to live.
HUD oversees the Federal Housing Administration (FHA). That means when a borrower defaults on an FHA mortgage, HUD takes ownership of the property, which in turn becomes a HUD home.
HUD offers a variety of programs geared toward making homeownership affordable. One example is the Good Neighbor Next Door program, which offers a 50% discount on HUD homes for teachers, firefighters, emergency medical technicians and law enforcement officers.
Fannie Mae is a government-sponsored enterprise (GSE) that buys conforming loans from commercial bank lenders and other mortgage originators after closing to keep the mortgage industry liquid. It then repackages them for sale to investors on the secondary mortgage market. When a borrower defaults on their mortgage, Fannie Mae takes ownership of the home.
Fannie Mae’s HomePath Ready program helps first time and low- to moderate-income home buyers purchase a home with only a 3% down payment required and will pay up to 3% of the loan amount in closing costs, if you buy a Homepath home.
Freddie Mac is another GSE. Like Fannie Mae, it buys conforming loans, but from smaller banks, credit unions and savings-and-loan institutions as well as other mortgage originators.
Freddie Mac’s Home Possible and HomeOne programs also help first time and low- to moderate-income home buyers by agreeing to purchase low interest loans with low down payments, similar to Fannie Maes programs.
Note that Fannie and Freddie dont make loans themselves. By creating these programs, they are letting private lenders know that they will buy these mortgages after origination. To learn more about these programs, ask your prospective lenders if they participate in these programs.