If you are a first time home buyer along the Jersey Shore you may be overwhelmed when it comes to choosing what mortgage is right for you. When it comes to obtaining a mortgage loan, there are quite a few things to consider.
Your Buying Style
What type of home buyer are you? There are many different routes you can go when it comes to shopping for mortgages. Some buyers like to call lenders directly, where others prefer to visit the various online mortgage-shopping services. If you do prefer to go the online route when shopping for a mortgage, know that in many cases you will be receiving a follow up call from loan officers or mortgage brokers.
Know The Basics
When it comes to obtaining a mortgage it is always ideal to know the basics of how it operates. There are typically two ways that mortgage lenders will charge you, the borrower, for using their services to obtain a loan. It will come from the interest charges you pay each month with your monthly statement throughout the life of the loan, and through discount points. Discount points are prepaid interest and typically one point is equal to 1% of your mortgage loan amount. When shopping around for a mortgage rate and you want to compare a loan with points to one with no points ask the lender to quote you the rates with zero points so you can easily compare.
You also need to determine if you want a fixed-rate mortgage or an adjustable-rate mortgage (ARM). A fixed-rate mortgage locks you into an interest rate for the duration of your loan, and your monthly payment remains the same throughout the life of the loan. An ARM loan tends to start with a rate that is lower, but it can increase and decrease throughout the life of the loan depending on the market.
What Mortgage Is Right For You?
To best determine which mortgage is right for you, begin by examining your current circumstances and what your future goals are. Decide if you would be better off with a fixed-rate or an adjustable-rate mortgage.
If you are looking to purchase a home that you plan to stay in for an indefinite amount of time, then a fixed-rate mortgage with a locked in interest rate is probably best for you. However, if you plan to only stay in the home for a few years an ARM mortgage may be best.
Typically, lenders would like to see a down payment of 20 percent, but some require as low as 3 percent to 5 percent. If you do not have the full 20 percent down, expect to be required to purchase private mortgage insurance (PMI) that will be added to the cost of your monthly payments. The more of a down payment you have, the better mortgage interest rate you can expect to receive from a lender.
After deciding what mortgage is right for you and your needs, next determine what loan term is right for you. The most common terms are that of a 15 and 30 years. Many times the monthly payment amount between the two terms may not be as different as you would think. If you can afford the higher monthly payment choose the 15-year term loan and save yourself money in interest.
If you are looking to buy a home along the Jersey Shore let the Ferzoco Group help. We would be happy to assist you with finding a mortgage lender who will work with you to help you determine what options are best for you.
The Ferzoco Group are experts in real estate from Ocean City to Cape May. If you are looking to buy a new home or sell your existing home, we’d love to hear how we can help you reach your real estate goals. Our job is to make your tomorrow better than today. Contact us today via email or give us a call at 609-264-6762.