Purchasing a home is a big and significant financial commitment. However significant this commitment is, finding the best and right mortgage can be frustrating as well, especially for first-time buyers. But there is one key solution to this dilemma and that is comparison shopping. It is important to speak to Columbia mortgage brokers, if not to lenders, during the process. Are there other factors to consider in evaluating your mortgage options?
What’s Better, Getting an Adjustable or Fixed Rate?
When it comes to Columbia SC mortgages, there are two primary options you can use. These are fixed and adjustable rate. The first option features a locked interest rate that homeowners are supposed to pay for the duration of the loan. In simple terms, the payment for both the principal and the interest remains constant. But this does not mean that taxes, insurance along with the other costs may not fluctuate.
In adjustable rate option, the interest to be paid fluctuates throughout the loan’s duration. It comes with an initial term period, which takes about 1 to 10 years. In this period, the rate remains constant. But it begins fluctuating after this period passes. Even with this issue, there are still many people who are attracted to use it because of the low initial rate it is known for. In the end, however, it is still best to think about the fluctuating factor and take at it on a long-term basis to make a more informed decision.
Do You Need to Pay for Points?
Point is defined as the upfront fee, which is 1% of the mortgage’s total amount. Point payment is done to lower the current interest rate and get a fixed amount. For instance, you can pay the amount of $2,000 for your $200,000 home loan with a 4.25% interest rate to lower your current rate to 4.125%. Paying for the point can be beneficial for those who are planning to keep the home loam for a long term. But it is not a good option if you are only planning to live in the house for below 7 years since the upfront costs will only outweigh the interest rate.
- How Much Should You Pay for the Closing Costs?
The amount of closing cost often represents 3% of your home’s purchase price. This cost is being paid at the closing or as the as the house purchase is finalized.
The cost for closing is composed of a range of fees, which are being charged by the lenders. The range of fees include appraisal costs, title insurance fees, processing and underwriting charges and more. If you are interested to further lower the closing costs, you have to know which from the good-faith estimate list of fees you can shop around for. More info on closing costs: http://en.wikipedia.org/wiki/Closing_costs
Want to know more how you can get the best mortgage and save from the option you use? Go to Columbia Mortgage Place to find skilled, experienced and compassionate Columbia mortgage brokers who can help you find one suited to your needs.