Most people who own homes have a mortgage, and it’s likely the largest amount of money anyone will ever borrow.
It is important for families to feel comfortable with whatever home loan they choose.
“One of the most important, and confusing, decisions that people make is buying a home and taking out a mortgage to pay for the house,” according to Mortgage Calculator. “The decisions you make on your mortgage will have financial ramifications for years to come.”
Here are four things to consider about a mortgage when buying a home.
Compare rates
You may hear about the Federal Reserve interest rate being raised or lowered, but the rate you get on your mortgage is not the same across the board. In addition to the federal rate, The Truth About Mortgage explains the variety of factors lenders look at to determine your mortgage interest rate:
- Loan amount
- Documents, such as tax returns, pay stubs and bank statements
- Credit score
- Who will be living in the home (you or a tenant)
- Loan purpose (to purchase or refinance)
- Your debt-to-income ratio
- What type of property you’re buying
- Loan-to-value amount (how much you’re paying compared to how much the property is worth)
“There are hundreds of different banks, lenders and credit unions that offer mortgages, some of them entirely unique,” according to The Truth About Mortgage. “These companies compete with one another to offer the lowest rate and/or the best customer service.”
Take advantage of grants
There are many programs, some national and some local, so it’s worth your time to look into them. The advantage of a grant versus a loan is you don’t have to pay it back, and it can come from any source.
For example, Salin Bank offers up to $8,000 from Homeownership Opportunities Program (HOP) grants when available, otherwise up to $3,600 Salin Bank grants to help lower income homebuyers with down payments and closing costs. You can qualify if haven’t owned a home within the past three years, your annual income is 80 percent or less of the area’s median income and you can invest $1,000 of your money. From there, you will be able to participate in a homebuyer education class to help you as you buy your home.
Ask about special mortgages
First-time homebuyers may not have 20 percent saved for a down payment or may want to save money on moving expenses or appliances for their new home. That’s where the Federal Housing Administration will pitch in. The First-Time Home Buyer program offers low-interest loans, credit assistance and advice.
You can also ask about offerings from local banks. For example. Salin Bank offers a mortgage for hometown heroes, including people in military, law enforcement, first response, health care and education.
“Salin Bank and Trust Company salutes the men and women in our communities who sacrifice to make our lives safer, healthier and more rewarding,” the bank says on its website. “Salin Salute — a low-cost mortgage that makes home ownership easy and affordable — is one way we can thank our community heroes for their service.”
Here are some of the benefits of Salin Salute:
- Up to $424,100 loan amount
- Seller-assisted closing costs allowed up to 6 percent
- 100 percent financing for military and 97 percent for nonmilitary
- Eliminate private mortgage insurance
- No maximum income restrictions
- No prepayment penalties
- Salin Checking Account is required with automatic loan payments deducted and maintaining direct deposit of your payroll or retirement pay
- Earn $300 after the first year by maintaining the Salin checking account
- Salin will donate $50 to a local qualified 501c3 charity
Don’t be afraid to ask questions, nor to walk
You likely will buy a house or refinance only a handful of times in your life, so it’s important you feel comfortable with your mortgage. A mortgage loan professional is an expert and, as such, should be able to answer your questions and guide you to helpful resources.
Don’t stay silent because you’re confused about something. A professional who is unwilling to engage or makes you feel like you shouldn’t ask questions is a red flag, so find someone who will work with you.
Those with questions about buying a house or their current mortgage may stop by a local branch of Salin Bank to talk with a mortgage loan expert — find the closest one here. For more on banking with Salin, visit salin.com or call (800) 320-7536.
Salin Bank and Trust, Member FDIC Equal Housing Lender NMLS#629452
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