Tips for Finding the Best Mortgage for Your Future Goals LUSO Federal Credit Union 2016-11-15 12:26:23 Important Information
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In broad strokes, everyone has the same financial goals when looking for a mortgage loan. They want a manageable, ideally low interest rate and a payment plan that can be met without negatively impacting their ability to build savings. More specific parts, like how fast you want to pay off the loan, depends on individual factors like how long you plan on staying in the home. Here are some tips for seeking out the best mortgage options that meet your personal financial goals.

Search Through Your Options

You can’t begin assessing your options until you know what those options actually are. Although all mortgages fall into the “fixed” or “adjustable rate” categories, these two types encompass a number of different mortgage products that are tailored for different situations.

Jumbo Mortgages

A “jumbo” loan is a type of mortgage that offers a large amount of money—usually upwards of $417,000, but this differs by county—at low rates. The catch is that requirements for such a loan are often strict and can be tricky to meet. For people trying to get a home in high-cost urban areas, jumbo loans are worth looking into.

VA Loans

These are mortgage loans reserved for current or past members of the military. VA loans have no down payment, no mortgage insurance premiums, low closing costs, and highly competitive interest rates.

FHA Loan

This is a type of mortgage that is insured by the Federal Housing Administration. They come with minimal down payment requirements (3.5%) and are useful for buyers with low credit. The mortgage is also assumable, which means it can be transferred to a buyer if you end up selling your home.

Look at Exit Fees

An exit fee is sometimes known as an “early repayment fee” and is basically a penalty you have to pay for trying to get out of your mortgage early. These fees can be incurred by refinancing, selling your home, or trying to switch to a different mortgage provider, among other possible causes. Make sure to ask a prospective mortgage provider what fees and penalties come with the loan and try to ask how they are calculated. If your financial goals or needs shift to the point where you have to repay early, you don’t want to be caught by surprise.

Understand Your Credit Score

Your credit score is used to determine many aspects of a mortgage loan, from basic approval to potential interest rates and loan caps. Your repayment timing and current debt form a large part of your credit score, so if you are concerned about your rating, then it can’t hurt to focus on paying down some debts before seeking a mortgage. It may also be useful to seek a credit report ahead of time. About five percent of credit reports contain errors and you don’t want to get penalized for someone else’s mistake.

Define “Affordable”

A general rule of thumb is that a mortgage payment should not be more than 28% of your monthly income (pre-tax). When looking at your finances and the different mortgage options, as well as things like insurance and property taxes, keep this figure in mind so you can assess whether a mortgage really is as affordable as it first appears.

Look to LUSO Federal Credit Union for Home Mortgage Options

LUSO Federal Credit Union is a not-for-profit, member-owned financial cooperative dedicated to providing members with quality financial services and products. We at LUSO pride ourselves on serving the financial needs of our members and provide home mortgage options with a number of different terms in Ludlow, Springfield, Chicopee, Westfield, and Hampden County, Massachusetts.

Feel free to contact our Ludlow branch toll free at 1-844-LUSO-FCU or our Wilbraham branch at 1-800-808-5876.