December 17, 2013

The Loan Process - Step 3 Shop Rates and Loan Programs

Which loan program is best for you?
  1. Think about how long you plan to keep the loan. If you plan to sell your home in a few years, you may want to consider an adjustable-rate or balloon loan. However, if like most people, you plan to keep your home for a longer time, you may want to consider a fixed-rate loan.
  2. Understanding the relationship between rates and points. Points are considered prepaid interest and may be tax deductible. Each point is equal to 1 percent of the loan. For example 1 point on a $150,000 loan is $1,500. The more points you pay, the lower your interest rate.
  3. Compare different loan programs. With so many programs to choose from, it's hard to figure out which program is best for you. I can put you in touch with an experienced loan originator who can help you find a loan program that best fits your short- and long-term goals.