5 Things To Look For When Shopping For A Home Loan

One of the first steps in beginning your home buying journey is to shop for a loan so that you can figure out what kind of mortgage you can qualify for, as well as the loan amount and interest rate that you could receive. It is a good practice to shop around at different lenders to get multiple quotes to make sure that you can get the best deal possible because different mortgage companies are able to offer you different products and amounts. Here are 5 of the top things to look at when evaluating a home loan estimate:

1). Is The Interest Rate Locked?

When you receive an estimate from a lender they will typically mark the interest rate as either locked or not locked. When a mortgage rate is locked this means that they are offering you the stated interest rate for a set period of time before it expires. This is important to know because if the rate is not locked and rates rise before you decide to move forward with the loan then it can adjust to whatever the new current market rate is. This is especially relevant in 2023 as we are witnessing a fluctuation of rates on a weekly basis. 

2). The Date The Estimate Was Issued

Estimates are typically only good for 10 days after they are issued, so it is generally recommended to get all of your estimates within this period so that you can compare them all before they expire. 

3). The Loan Term

Most mortgages are either 30 year mortgages or 15 year mortgages, meaning you will be paying off the balance of your home in either 30 years or 15 years. There is going to be a difference in interest rates and monthly payments depending on which of these options you go with.

4). The Loan Type

There are a variety of different types of home loans, including Conventional, VA, FHA, and USDA. Each loan type will have a number of different requirements such as loan limits, eligibility requirements, and other determining factors. There are pros and cons to every loan type so be sure to speak with the lenders you are working with to know which one is best for your situation. 

5). Is It A Fixed Rate Or Adjustable Rate Mortgage?

A fixed rate mortgage will have a set interest rate that will remain the same throughout the entire course of the loan. An adjustable rate mortgage, on the other hand, often has an initial rate that occurs for a set period of time before adjusting to a different rate later on in the course of the loan. It is important to be aware of which type you are looking at so that you won’t be surprised at any potential rate adjustments later on down the line.

If these factors seem overwhelming or confusing in anyway, don’t worry! Our team would be happy to help you compare mortgage estimates or help connect you with our network of experienced local lenders so that you can get the best product that will get you into the home of your dreams!

To learn more about how to evaluate mortgage estimates, take a look at this article from Redfin.com.