Whether you’re buying an already existing home or having one custom made, the biggest question on your mind is probably how much will this cost? The only way to determine that for sure is to find out what your mortgage rate will be and go from there. If you’re trying to save money — and really, who isn’t — here’s a guide to finding the best mortgage rate for your home.
First, you need to answer these four questions. Write down your answers so when you meet with lenders you’ll be prepared.
Do you want a fixed or adjustable rate?
There are pros and cons to both fixed and adjustable rate mortgages. With fixed rates, you are locked into a rate that you’ll pay the life of the loan, no matter what happens to the market. Adjustable rates often have low entry rates but may go up — or down — over the life of the loan, depending on how the housing market is performing.
What down payment will you be able to provide?
You’ll need to determine how much of a down payment you can provide for the to help you find the best mortgage rate. Of course, the more you can put down the better for your overall payment amounts. But some mortgages will require a certain percentage to be put down in order to qualify for these specific rates. Knowing how much you have available will help you find the best mortgage rate that you qualify for.
What are the closing costs?
Along the same lines as the down payment, the other out-of-pocket expense you’ll need to account for is closing costs. Closing costs and what’s required range from education classes to a value assessment. You’ll want to find out what costs your lender will require of you so you can factor those into your savings.
Do you (or does anyone in your household) qualify for first-time home buyer programs?
If this is your first time buying a home, you may be able to take advantage of some first-time home buyer breaks like reduced down payments or even special mortgage rates. If this isn’t your first time buying a home, all hope is not lost. Perhaps your spouse or another home resident qualifies for first-time home buying programs, and you can use that to your advantage.
Once you have these factors in mind, you’re ready to start reaching out to lenders to find the best mortgage rate.
Tip: Diversify your options
As you’re reaching out to lenders, you’ll want to look for a diverse cast to get offers from. If you’re a member of a credit union, find out what kind of financing is available there. Reach out to banks. Perhaps your realtor has a recommendation of banks they have worked with in the past. Finally, get mortgage information from a broker. Having a mix of all three types of mortgages — broker, bank, credit union — will help ensure you get the best mortgage rate possible for your new home.
At Fortin, we have a list of Maine mortgage providers we’ve worked with successfully in the past and would recommend to clients. Check out that list for a good starting point.