Whether you’re a first-time home buyer or thinking about building a new home, finding the home loan that’s right for you is vital. Indeed, it’s probably the biggest loan you’ll have and represents one of the largest financial commitments you can make.
We understand that mortgage lending can sometimes be confusing and even a bit overwhelming, so here’s a look at the process and how you can find the home loan rate you’ll love.
At its most basic level, your mortgage includes repayment of the purchase price of your home and the interest on the loan. Some things you should consider when searching for a home loan rate that suits you best include how long you expect to live in the home, your tolerance for potential increases in monthly payments, and how much you can borrow.
Here are common components of a mortgage payment:
- Principal – the actual amount you borrowed from the lender. Your principal balance consists of the purchase price of the home plus fees, minus your down payment.
- Interest – Interest is accrued payment to payment.
- Insurance – Private mortgage insurance is necessary – in some cases – until you’ve paid a sufficient amount of interest to own at least 20% of the equity in your home.
- Real Estate Taxes – It’s important to note that the tax-assessed value of your home may be different than its appraised value.
Calculating Your Home Loan
Here’s a basic example of how your home loan is calculated:
- The price of your new home is $150,000
- You have a down payment of $30,000
- With a 30-year fixed loan at an interest rate of 4.25%, your monthly payment (including insurance and taxes) would be approximately $1000.
Calculate your own home loan using this Online Loan Calculator.
Types of Loans
Another important decision in the home loan rate process is the type of loan you want.
- Conventional loans (Variable rate or Fixed rate) – In a variable rate loan, your repayment amount will vary as economic conditions change. It could increase or decrease as the rate changes. With a fixed rate loan, your repayment amount for principal and interest will be fixed for a period of time. You’ll always know what you have to pay each month.
- VA loan – Loan benefits for veterans who have served active duty in the armed forces during times of conflict qualify for loan benefits offered through the Veterans Administration.
- FHA loan – The Federal Housing Administration was created to help people obtain affordable housing. An FHA loan is made by a bank but is insured through the federal government. It’s often the least expensive type of loan that non-veterans can get.
Our Home Loan Center offers you a complete mortgage loan service, including FHA, VA, and conventional financing, and we pride ourselves on being the People That You Know when securing a loan for the home your love.
Get started with our team today!