|
There are many choices when it comes to getting a home loan. You can get a 30 year fixed or a 5 year ARM. Knowing the differences and figuring out which best suits your finances is important.
The first and most important step to take is to check your FICO score (better known as credit score). Be sure to get the score from all 3 reporting agencies (Experian, Equifax, and TransUnion). There are numerous websites that can help access your scores.
HOW DO I KNOW IF MY CREDIT SCORE IS GOOD?
The best way is to check your credit score through Equifax. Here is the range of scores:
Very Good-Excellent: 700 or above
Ok/Good: 620-699
Low: 580-619
Bad: 580 and below
If you are in the Low to Bad range, some credit improvement should be made before trying to get a loan. Basically good interest rate = good FICO score
NOW I AM READY FOR A LOAN, BUT WHAT KIND?
Government Loans: Citizens who served in the military or are currently serving in the military could be eligible for a VA loan. Major benefits are usually no down payment, favorable repayment terms, and usually easier to obtain than conventional financing.
Fixed Mortgage: Typically loans range from 15-40 years. 15 and 30 year loans tend to be the most popular. There is a fixed interest rate for the entire length of the loan so that means payments will remain the same throughout the life of the loan.
Balloon Loans: Short term loans usually lasting between 3 and 7 years. During this period the interest rate is fixed. When the balloon is up the remainder of the loan is due unless refinancing is obtained. Typically a favorable interest rate can be obtained over the short term, however the down side is when the balloon is up interest rates could go up, making the payment a lot higher.
Adjustable Mortgage Rates (ARM): Interest rate adjust during the life of the loan fluctuating according to interest rates and the defined index. This index is usually established when the loan is applied for.
Do not forget to take into account whether or taxes and insurance are going to be held in escrow or if you are going to be responsible for making these payments.
What if I already own a home and need to get a loan?
Well, you need some money. Robbing a bank will land you in jail. The next best thing is going to be to get a loan. A home equity loan is always a good option to get money at a reasonable interest rate. Maybe you have a fence, deck, or landscaping project that you want to complete.
If you need a fence, or a deck, or painting done, a home equity loan or home equity line of credit is a great way to get money to do home improvemnet projects like painting, fences, decks, and additions by using the value of your home as collateral. If you are selling a home and need to pay for improvements on it, like a patio, landscaping and irrigation system, deck, outdoor fireplace, painting, or a fence, a home equity loan is a great way to pay for that new project. Maybe you want to have a baby and need money to cover medical expenses and pregnancy, decorate the baby's room, or need some money for diapers, formula, and daycare. A HELO or HELOC is a great way to do ANY of that.
Using a home equity loan to improve your residence is always a good idea. Adding a wood fence or a deck can add thousands of dollars to the value of your property.
Call Jamie Harrison your TOP Raleigh REALTOR® and Raleigh real estate agent. For all your real estate needs, visit my website.
|
