It makes good sense to shop wisely when it comes time for your home financing.

Whether you wish to remain in the home for decades or need funding for a home designated for short-term use, there’s a mortgage plan that will help you accomplish your goals and meet your monthly budget. FIXED RATE MORTGAGES The life of the loan is important to establish your monthly payment according to interest rates and how much you can afford with the payments. Shorter term loans will have a higher monthly payment when opting for a 15-year payoff as opposed to a 30- or 40-year fixed rate. The benefit of securing a fixed rate long-term loan enables the borrower to guard against fluctuating interest rates and surprise price hikes for the life of the loan, a choice that is ideal for borrowers who plan to remain in the property for many years.

ARM LOANS
The adjustable rate mortgage, or ARM loan, is set with the current interest rate that the borrower’s credit score is qualified for. This type of loan may be designated for a two-, five- or seven-year period and may be set with a very low rate. Although the monthly payment is lower at first, the ARM has a date when the loan will adjust and therefore be subject to the current interest rate at that moment. In an economy where nothing is certain, an ARM mortgage loan makes good sense for a home buyer who does not intend to remain in the property for a great length of time. If the property was purchased due to a job transfer, temporary residence or investment purposes only, then an ARM can be a practical loan.

FHA FUNDING
First-time borrowers and those who need financial assistance to get into a property may apply for FHA lending services. The FHA is a guarantor over a conventional loan to secure the funding if the buyer defaults. This type of funding will cover up to 96.5 percent of the total loan balance, thus requiring a minimal down payment of less than 4 percent. In addition, home buying applicants with challenged credit are encouraged to apply, and special discounts and incentives are made available for public service employees with variable guidelines for each state. FHA loans are fast, easy to secure and carry minimal applicant restrictions, making this type of mortgage option a popular choice for new buyers.

GET THE FACTS
Before you sign on the dotted line, it is crucial that you understand your loan documents one page at a time. Real estate paperwork is extensive and confusing to even the most seasoned contract reader, and once you sign the document before a notary, you are fully responsible by law to fulfill the terms and agreements. A good loan officer will be able to walk you through the papers and make you feel at ease to ask any and all questions you may have.

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