How to know the right type of mortgage you need?

Going through the mortgage process can be an intimidating and overwhelming experience, even for people who have done it before.

For newcomers, it can be particularly tough. It’s easy to understand why:  they’re facing the prospect of committing to an agreement that puts them on the hook for huge amounts of cash over a very long period of time.

Determining what type of mortgage that best suits you and your family’s needs is daunting, but there’s surely one that’s right for you.

Mortgage to look for if you want a low monthly payment

The standard is a 20% down payment; a 30-year fixed rate loan can help you keep your payment low. For instance, if you provide a 20% down or a $50,000 on a $250,000 house, your monthly payment will be around $990. NPBS offers a fixed rate home loan if you prefer low and fixed payment on your mortgage. Other mortgage types, while possibly helping you build equity quicker, could add more than $450 to your monthly mortgage payment.

What happens if you can’t afford a conventional mortgage

Of course, not all can afford 20% down payment required by banks. Fortunately, there are other mortgage options out there that require less cash up front and can help you become a homeowner. But this also means that you’ll have a higher loan balance and will need to fork over more money monthly. This also entails less equity in the home if you’ll sell it in the future because you’ve also been paying mortgage insurance premiums.

Mortgage consideration for smaller, less expensive home

This is a wise decision. One of the smartest things homeowners can do is to shift to a home that you can financially sustain. You may be able to avoid monthly payments and interest altogether if you pay for your home outright. As added bonus, you’re building equity as your home’s value rises over time.

Buyers unsure about their length of stay at current city

You worry if it still makes sense to buy, right? How long you’re planning to stay in a home is a crucial consideration when deciding to purchase a home and apply for a mortgage. It might be around five years before you can recoup the initial costs of buying a home. Real estate professionals recommend shopping around, gaining information from multiple lenders to ensure that you’re getting the best price. You can work with a mortgage broker to find a lender.

If you’re sure that you won’t be staying much longer than let us say, five years, options that will get you the most equity in your home, such as a fixed 15-year or 30-year mortgage are the way to go.

Indeed, mortgage processing is long, complex and filled with details. The entire process can be nerve-wracking and many borrowers find themselves just wanting to simply get it over with. This approach isn’t necessarily conducive to finding the best home loan.

Hopefully, with the suggestions above, you can make a better choice that will produce the best right results for you. Best of luck!