Finding the right home loan is just as important as finding the right home. After all, we often find ourselves intertwined in these loans for nearly 30 years, and sometimes longer if we have the need to refinance. There are many different factors when choosing the right home loan, it’s not always as easy as choosing the one with the lowest interest rate.
Closing costs are an important aspect of any home loan. There are lots of fees associated with the paperwork included in closing any home loan, from appraisal fees to document fees. People often think these fees are standard across the board, but this couldn’t be further from the truth. Feel free to shop these fees around. I would compare NPBS home loans.
As I said before, the interest rate isn’t everything. Some people will find themselves in shorter term loans that they can’t possibly afford just so they can have a lower interest rate. You don’t want to do anything that could cause you to eventually default on payment. Also, lower term loans will generally see an increase in rates when it comes time to take out another loan. If you plan to be in your home for 30 years then it may make sense to take out a term loan for that same period. If you plan on relocating for a job within 5 years then of course it would make sense to have a shorter term loan and a lower interest rate.
It’s not always about money either. Finding a reputable loan company is just as important as anything else. You want to make sure your loan was done legally and by the book, this way you won’t have to worry about any liability or issues in the future. Also, you want a responsive loan officer who provides quality customer service. Often an agreement to purchase a home contains clauses and contingencies regarding an end date to close the loan. You could lose out on the home of your dreams, or an earnest money deposit if your loan doesn’t close by the agreed upon time.
I saved the interest rate discussion for last simply to illustrate that there are many other important factors to consider. While interest rates shouldn’t be drastically different from company to company they can have small differences. Holding a loan for 20 or 30 years is a long time, and paying interest over that period of time can really add up. Meaning, even a change of a quarter percent or less can have a significant impact on the interest you pay over the life of the loan.