Selecting a Home Mortgage

Our "Getting a Home Mortgage" checklist and list of FreeLoanComparison.com mortgage products to assist you in finding a home mortgage that’s right for you. A home mortgage indicates that a specific amount of money will be loaned at a specific interest rate for a specific period of time (something lenders refer to as term).

FreeLoanComparison.com lending partners offer a variety of home loan mortgage products:

• Fixed-Rate Mortgages are the most popular type of residential home mortgage. They offer a home mortgage interest rate that will remain the same for as long as you have your home mortgage loan. Stretching out your repayment term means your monthly home mortgage payment will be less than it would be with a comparable shorter-term home mortgage.
• Adjustable-Rate Mortgages (ARMs) offer a home mortgage interest rate that adjusts periodically to keep it in line with changing home mortgage market interest rates.
• Low and No Down Payment home mortgage options allow for as little as three percent down, or no down payment at all for home mortgage borrowers with good credit but with minimal funds for a home mortgage down payment. Some home mortgage products come with no income restrictions for new home buyers with good credit.
• Home Improvement loans allow you to buy and renovate a home or repair or improve your home. The amount of the home loan is based on the as-completed, appraised value of the home. If you want to build your home and buy the land upon which it will be built, then consider a Construction-to-Permanent Mortgage.
• Special Financing Mortgages were created for home buyers with special needs, such as low- and moderate-income people who have disabilities or who have family members with disabilities living with them.
• Nontraditional mortgages were developed for those with less than perfect credit. If you don’t have a credit history established, you may be able to use past utility bills, rental receipts, and other types of statements to show a home mortgage lender that you pay your bills on time. Aside from a nontraditional credit history, there are home mortgage products available if you think your credit profile could be improved. For example, the Expanded Approvalwith Timely Payment Rewards is a product that provides homeowners with a reduction in their home mortgage interest rate after 24 consecutive months of "timely payments" within the first four years of the loan.

Check whether your employer offers an Employer-Assisted Housing (EAH) program. The EAH loan is commonly used toward your down payment, closing costs, and interest rate buydowns, which can help lower your monthly mortgage payment.

If you qualify, you may consider government loans as a way to finance your dream of homeownership. Agencies that offer such home mortgage loans are the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), and Rural Housing Services (RHS). To get one of these home mortgage loans, you apply through a home mortgage lender that is approved to offer them. The residential property being purchased must meet certain criteria. Check with your FreeLoanComparison.com lending partner to see if they offer these types of home mortgage loans.

There are also state and local housing agencies that make funding available to new home buyers. More information about these types of home mortgage loans is available through your state housing authority or through our state housing agency list.

Selecting a New Home Mortgage - Important Terms

The home mortgage amount is the amount of money you plan to borrow. Your new home mortgage loan amount will be based on the purchase price of the house minus the amount of your down payment and other additional funds.

You and your FreeLoanComparison.com lending partner may discuss home mortgage interest rates and discount points to determine the best options for your situation. Some home mortgage loan products offer three percent down payment or no down payment if you meet certain criteria. Most will offer several home mortgage options requiring a low down payment. However, if you can afford to put more money toward a down payment, it will reduce the amount of your monthly home mortgage payments.

Home mortgage insurance may be required in order to qualify for the home mortgage loan you want. Typically, it is needed when your home loan down payment is less than 20 percent of the purchase price of the property.

You should specify the type of home mortgage loan you want -- fixed-rate, adjustable-rate, low down payment, or special financing are some options. You will work with your home mortgage lender to determine your closing (or settlement) date -- it is usually 30, 45, or 60 days from the time you have a ratified sales contract. If your FreeLoanComparison.com lending partner uses automated underwriting, your home mortgage lender may be able to offer you benefits such as an earlier closing date and reduced documentation.

Selecting a Home Loan Mortgage Rate

You may discuss with your home mortgage lender whether home mortgage interest rates are likely to rise while your new home loan is being processed. If you anticipate rising home mortgage rates, it might be a good idea to lock-in the current home loan interest rate. When you lock in a home mortgage rate, you may have to pay points to guarantee the home mortgage rate. (Your home mortgage lender can provide more specifics about this option.) A point equals one percent of the home mortgage loan amount. So, if you are applying for a new home mortgage totaling $200,000, one point would equal $2,000.

It’s important to get an agreement in writing that lists when the home mortgage rate lock-in takes effect and how long it remains applicable. The length of the home mortgage lock-in should last through the closing on your home loan. Mortgage lenders typically provide a variety of "lock options," and they can help you select the one that best fits your needs.

Remember, in most cases, once you’ve signed the mortgage loan application, you will have to accept the terms of the new home loan if it’s approved. So, you should make sure your home mortgage loan application contains terms and amounts that are acceptable to you.

If you’re turned down, you’ll probably have to pay the home mortgage lender’s processing costs -- which may include, but are not limited to, an application fee and a credit report fee. You should try to identify the reasons your home loan application was rejected. Perhaps you need to improve your credit rating, or you have limited funds in your savings or checking account, or you have too little to put toward a new home down payment. Your FreeLoanComparison.com lending partner can provide additional information if needed.

After you’ve determined why you were turned down, you have several options. You can try to qualify for a smaller home mortgage loan amount; you can delay getting a home mortgage while you pay off some of your debt; or you can take steps to increase the amount of money you have for a down payment. Talk with your home mortgage lender about other home mortgage products that might better suit your financial situation.

Home Mortgage Loan Application Costs

Although costs and terms vary from home mortgage lender to home mortgage lender, most require you to pay an mortgage application fee, a credit report fee, and an appraisal fee at the time of application.

You may want to discuss with your home mortgage lender the options you have if you change your mind about purchasing a new home after you’ve submitted an offer. Specifically, you may want to ask under what circumstances your home mortgage application fee or credit report fee will be refunded.

For more helpful mortgage tips on a home mortgage , mortgage refinancing, home loans, reverse mortgages or a home equity line of credit, contact FreeLoanComparison.com today!

Last update: November 14, 2008