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How Do You Shop For The Best Mortgage For Your New Home?



When you’re looking for a new home and feel ready to buy the one you want, the challenge that comes next is qualifying for the right mortgage. As with just about any other kind of business loan or credit card, there are no two mortgages that are exactly the same, and you’ll have qualifications you’ll need to meet. If you have a really good credit profile, you may get the best deal with a government-backed mortgage; otherwise, conventional mortgages Phoenix AZ are what you’ll typically apply for. But how do you break down which kind of conventional mortgage is the right one?

Deciding On The Mortgage Payment Term Length

Assuming you meet the credit requirements to be approved for a conventional mortgage, one of the first things you need to decide is how long you intend to take to pay off your mortgage. There is not really an easy answer for this because this will depend on your personal financial goals and how quickly you intend to own your home free and clear. You can pay much less per month on a 20-year or 30-year mortgage than you would on a shorter 10-year or 15-year mortgage, but you should be careful about signing up for a long-term mortgage in case you decide you’re ready to accelerate payments and pay it off quicker, because some mortgages do carry penalties for paying them off early. You may be able to refinance your mortgage if you find your plans have changed for your home.

Choosing The Rates And Conforming And Non-conforming In A Mortgage

Along with the length of your mortgage repayments, you could have your interest rates either be fixed or adjustable. If you go with a fixed-rate mortgage, you’ll usually have a pretty simple payment schedule that goes from interest to principle amortization and the payments will generally be the same. Sometimes an adjustable-rate mortgage is better because the rates can go down if the market looks good and you may save money, but there is also a risk they could go up and cost you more over time. Generally shorter mortgage terms are where you’ll want to go with adjustable rates. With conforming mortgages, you have a limit of about $484,000 that you can qualify for, and usually within the regular market conforming mortgages are sufficient. If you’re interested in a more luxurious home, a non-conforming or jumbo loan may be available, but these do have more strict qualifying requirements and also come with higher down payments.

In conclusion, it usually takes a while before you decide which mortgage offers the best terms, but that’s why you should look around at different lenders. Sometimes banks aren’t the best lenders for mortgages, and credit unions and alternative consumer finance institutions offer better terms for those who may not qualify for high credit score mortgages. But you should still keep a close eye on your credit score and look at your report, and also carefully go over the covenant and all purchase documents before signing off on any.

 

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