It’s smart to shop for financing before you shop for a new house. Pre-qualification can be a valuable negotiating tool, since the seller will know you’ll be able to close on the home quickly. And by pre-qualifying, you can make sure you’re shopping in the right price range, so you don’t fall in love with a house that costs far more than you can afford.
Money Zone: Mortgages
What kind of mortgage is best for you? A 30-year, 15-year, fixed-rate, adjustable rate (ARM) or some other variation? There are many choices, but in the end you’ll need to figure out exactly how much the mortgage you choose will cost over the long run. We can help you figure it out. Plus, we’ll help you understand closing costs and points, which can add up to thousands of dollars.
A big dilemma is whether to choose a fixed-rate mortgage or an adjustable-rate mortgage (ARM). With a fixed-rate mortgage, your monthly payment is set at the beginning and will never change. If you opt for an adjustable-rate loan, your initial interest rate may be lower, but the interest rate and monthly payment can climb quickly as interest rates rise.