Right Mortgage Loan

Choosing the Right Mortgage Loan

There are many different mortgage loan programs available today. Choosing the right type of mortgage loan can make a difference in your monthly payments.

Q: Besides the interest rate, what other factors should I consider?

A: The length of the loan term is also very important because it affects your monthly payment and how much you'll pay in interest payments (finance charges) over the life of the mortgage.

For example, a 15-year fixed-rate mortgage will save you thousands of dollars in finance charges and you'll pay your home off sooner, but your monthly payments will be higher. If you can afford the slightly higher monthly payment, this is a great way to quickly build equity in your home.

Q: What type of mortgage is best for me?

A: Several factors play into deciding what mortgage is best for you:

• Your current financial position;
• How you expect your finances to change;
• How long you plan to live in your home;
• How comfortable you are with your monthly payment changing periodically.

If you're not sure which type of mortgage loan is best, one of our mortgage loan officers can explain the pros and cons of each to help you make an informed decision.

Q: What does my mortgage payment include?

A: In most cases, your mortgage payment includes:

1. a payment on the Principal of the loan (the amount borrowed)
2. a payment on the Interest (finance charges)
3. a payment into an escrow account for the lender to pay your property taxes, hazard Insurance, etc.

Q: How much cash do I need for the down payment?

A: It depends. Generally, you'll need between 3% - 20% of the home's value, but many first-time home buyers qualify for special programs that offer down payment assistance. Veterans and active duty military personnel may qualify for mortgage loans with zero down payment required.

Q: Will my credit history affect my ability to get a mortgage loan?

A: Unless you've experienced some serious financial setbacks that affected your ability to repay your debts on time, you probably don't need to worry about it. It is, however, a good idea to obtain a copy of your credit report and review it before you begin the mortgage application process. If there are any errors on your credit history, you can resolve them before you submit your application.

If you've had credit problems in the past, be prepared to explain the reasons with your mortgage lender. There are legitimate reasons for credit problems (layoff from job, illness, divorce, etc.), but as long as the problem has been corrected and the lender can see improvement, you may be approved.