When looking for suitable home loans, always remember to compare your home loan opportunities in the proper way. This means that you cannot actually compare a 30 year fixed home loan at 6.5% to a 5/1 ARM at 3.8% without real knowledge of what you are doing. What does it all mean anyway? Below is an easy home loan guide:
- Loan Term – The loan term is the repayment time of your loan. In most cases mortgages are 30 years, but some of them may be 10 or 15 years. The longer the term the lower your monthly payment, but at the same time you are paying the higher interest!
- Interest Rate – A fixed interest rate indicates that you will be offered the same interest rate for your entire loan period. An adjustable interest rate may change after a period of time. If you are comparing a fixed rate and an ARM loan, use a mortgage calculator to compare your payments down the line as well as those up front.
- Closing Costs – Lenders, closing agents and attorneys, state regulations should be taken into account when calculating closing costs. Choose the lender with the smallest amount of junk fees or the one that will cover your closing costs out of his own revenues.