5 Tips for Finding the Best Home-Buying Loans

You’ve found your ideal home, and it’s time to make an offer. Take the next step and find the best home-buying loans. You can choose a loan that doesn’t pile on more debt and move into the next chapter of your life without breaking the bank. It’s an exciting time, but how can you find the best loan? Read on to discover the top tips for selecting the right loan.

1. Compare Interest Rates and Other Fees

Shop around and compare mortgage interest rates. Different lenders offer different interest rates. Selecting a loan with a lower rate can help you save money over the life of the loan. Before selecting a mortgage, set a budget you are comfortable with. Make sure to define what your needs are. Keep these in mind while shopping for loans, and don’t settle for a mortgage that stretches your budget too far or doesn’t meet your home loan needs.

Consider other fees while comparing rates. This includes APRs, which are annual percentage rates. Your APR is the yearly rate charged for a loan and affects what you will pay over the life of the loan. A good APR is affected by several factors. These include competing rates in the market, the prime interest rate, and your own credit score. When shopping for an APR, check the terms. Does the rate last for the life of the loan? Is the low APR only an introductory rate? Will the rate increase to a higher APR after the introductory term has concluded?

Make sure to account for closing costs—application, appraisal, title, and loan origination fees. These fees are paid to a lender to process a loan application and vary from lender to lender and state to state.

2. Choose the Right Lender

Select a lender with the best rates, fees, and loan terms. Research reputable lenders and compare their rates and terms. Interest rates, APRs, and closing costs vary and affect what you pay over the life of the loan, so they matter. Ask a few questions. Does the lender have competitive rates? Affordable payment options? Flexible loan terms? Flat origination fees that will help you save on closing costs? Compare rates and terms and don’t compromise.

Partnering with a credit union unlocks lower rates, flexible terms, and customer service you can count on. Credit unions also typically offer options for smaller down payments, including zero-down-payment programs for first-time home buyers.

Look for lenders with a quick and convenient home loan process. Can you close online? Does the lender offer eSigning? The right lender not only saves you money but also time. The more a lender streamlines the process, the more time you have to focus on this new chapter in your life.

Solarity Credit Union in Washington State makes getting home-buying loans fast, easy, and straightforward. With competitive rates, they offer flexible terms and affordable payments to fit your budget and lifestyle. No matter where you are in the mortgage process, they will help every step of the way and simplify the process so you can focus on what matters most. Apply online in minutes and start the conversation with a Home Loan Guide today.

3. Select Loan Terms That Fit Your Lifestyle

Select a loan that fits your budget and lifestyle. There are several loans to choose from, including conventional loans, jumbo loans, government-backed loans, fixed-rate mortgages, and adjustable-rate mortgages (ARMs). Each loan has different terms. Your circumstances and needs determine which loan type you will benefit from.

Do you need the stability of a fixed-rate loan so you can easily budget each month? Are you planning on selling after a few years and prefer to benefit from the initially lower interest rate of an ARM? Is your credit score good so you qualify for lower borrowing costs with a conventional loan?

Also, consider the term of a fixed-rate loan. Most lenders offer 10-, 15-, 20-, or 30-year fixed rates to pay off the loan.

4. Check Your Credit Score

Before you shop for a mortgage, check your credit score. Typically, the better your score the lower your interest rates. For the best mortgages, aim for a score of at least 740. The minimum credit score needed to qualify for a mortgage varies from lender to lender. However, a score ranging from the 500s to the 600s can qualify.

If your score is lower, there are ways to improve your credit score. To qualify for better rates, work on improving your score before applying for a mortgage.

5. Learn About Government-Insured Loans

Are you eligible for a government-backed loan, such as a USDA home loan? If you are a moderate- to low-income borrower in a rural area, you may qualify for a USDA loan. These loans offer reduced rates and may roll the closing costs into the total of the loan. Some USDA loans don’t require a down payment. These loans do come with income restrictions and are subject to location, so first check if you qualify. Keep in mind that there may be extra fees, such as an up-front fee of 1% of the loan amount and an annual fee.

If you qualify, make sure you choose a lender that offers these loans. Shop around and check which lenders have programs designed to help you buy a home even if you cannot afford a traditional 20 percent down payment. Do they have zero-down home mortgages or USDA loans? Can you use your current home’s equity as a down payment for a new home? If you’re in Washington State, consider speaking with a home loan expert at Solarity Credit Union to discuss your options.

No matter your circumstances, there is a home loan that is right for you. Buying a home is more accessible than you may realize, and the right home loan can help you achieve your dream of homeownership.