Financing your New Home in a World of Historically Low Rates

Financing your New Home in a World of Historically Low Rates

Researching the Best Rate for your New Home Mortgage

As a new home buyer, it is very important to understand the process of choosing a lender and finding the best rates. The process of buying a new home can be a different process than purchasing a resale home as the seller sometimes is a developer or builder. Although the process might be different, there are consistent things to look at and important factors that need to be considered when purchasing any home including new home sales.

Proper Research Will Help with Financing Your New Home

Proper Research Will Help with Financing Your New Home

The market is starting to recover and the financing of a new home is more strict and conservative. The market downturn in 2009 related directly to mortgage rates and consumers locking into poor mortgage options. Although the industry is now aware of these issues, buyers need to stay on top of the best options for them.

Steps for Financing Your New Home

  1. Get mortgage rates and options from several lenders. They are not all the same and buyers need to be aware of all the options on the market.
  2. Go through the exercise of knowing what you can afford. It is not just what you qualify for – it’s what can you pay monthly, does that take into account property tax and maintenance costs?  Be sure you can afford what you are searching for.
  3. You need to ask for information about the total loan amount, the loan term and the type of loan so that you can compare the information. Take all of your quotes and read through them. Understand the pros and cons and speak to your lenders about how they can overcome their cons. Wade through all the information carefully. It’s important to be methodical and precise when financing your new home.
  4. Ask each lender and broker for a list of its current mortgage interest rates and how long it will be available. Sometimes the rates being quoted are the lowest for that day or week so be sure you understand what your rate will be.
  5. Ask whether the rate is fixed or adjustable. Keep in mind that when interest rates for adjustable-rate loans go up, generally so does the monthly payment. How will this affect your budget? Can you still afford it?
  6. If the rate quoted is for an adjustable-rate loan, ask how your rate and loan payment will vary, including whether your loan payment will be reduced when rates go down. Adjustable is not something to be feared, but it is something to understand.
  7. Ask about the loan’s annual percentage rate (APR). The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.

Current Rates are Historically Low

There are a lot of worries and fears about mortgages and lenders since the financial backlash in the past. However, rate are still at historically low levels. Therefore, customers have to be savvy and sophisticated in their decision making and should be your own best advocate through the process.

Financing Your New Home Allows the Purchase of Beautiful Luxury Homes like this one.

Financing Your New Home Allows the Purchase of Beautiful Luxury Homes like this one.