How To Shop For A Mortgage

Shopping for a new home in Texas? Anyone who has been through the process of buying a new home can tell you that shopping around for a home mortgage at the same time that you’re visiting communities and neighborhoods to view homes for sale is one of the best ways to approach the process.

Whether you’re looking for your first home or your forever home, learning how to shop for a mortgage and researching types of mortgage loans in Texas will give you a clearer idea of how much you can afford, what types of loans you qualify for, and what you may have to do in order to improve your credit to qualify for a lower interest rate.

Bonus Tip! If you’re a first-time home buyer, you may want to read our tips and real estate terms blog article as well! It covers the most common real estate terms that you are likely to encounter as you begin shopping for that first home and looking into types of mortgage loans in Texas. It’s an exciting time, and a little bit of extra information can make it a whole lot easier and more enjoyable!

How Mortgages Work

The first thing you should know when shopping for a mortgage is just what you’re getting into. A mortgage is a financial product that allows you to borrow the funds you need to purchase a new home. Because a mortgage is a much larger loan than most others you will ever take out, it has a number of unique properties, but it also has a lot in common with any other loan. For instance, you’ll probably borrow it from a lender such as a bank.

Mortgage terms vary from one lender to another, but most mortgages have either 10-, 15-, 20-, or 30-year terms. During that time, you will make monthly payments to the lender to cover the principal, the interest, and the escrow. Most mortgage lenders also require a down payment on the house you want to buy. The amount of this down payment varies, but the more you pay up front, the less you’ll pay later. Many buyers aim to put down as much as 20% of the total cost of the home up front.

What to Know About Interest Rates

A new home is one of the largest purchases you will ever make in your life, and the typical mortgage is spread out over 15 or even 30 years. This means that every interest rate percentage point has the potential to save you—or cost you—thousands of dollars over the life of the mortgage. A lower interest rate means you’ll have more money in your pocket at the end of each month. Interest rates fluctuate over time, and you can get mortgages with either fixed or variable interest, depending on your financial situation and your lender. Both have their own pros and cons, but it’s important to understand the realities of your interest rate before you buy.

How to Shop for a Mortgage

Shopping for a mortgage can be stressful, but it doesn’t have to be! Your best tool for making your home-buying experience as pleasant and stress-free as possible is knowledge. Knowing how to shop for a mortgage, how mortgages work, what your financial situation is, and what kinds of terms you’ll be encountering can take a lot of the stress out of buying a home in Texas.

One of the first things you’ll want to do when you begin to shop for your next home to is look into types of mortgage loans in Texas. As we mentioned already, your mortgage is one of the largest financial transactions you will probably ever make, so it’s important to have your finances in order. To get the best deal you can, you’ll want to secure a low mortgage rate, which also reduces the amount of interest that you’ll pay over the life of your loan.

As you’re looking over your financial situation, you’ll want to pay attention to things like your credit score, your debt-to-income ratio, your employment history, and how much you have available for a down payment. All of these factors will come into play as you’re shopping for a mortgage and trying to secure the best deal you can on that home of your dreams.

Shopping Around

You might be surprised how many different types of mortgage loans you qualify for. It’s always a good idea to shop around with different mortgage lenders to see where you can get the best deals and what types of loans might be available to you. Start with your preferred lenders, including your regular bank or a lender suggested by your realtor, but don’t feel like you have to go with your first choice. Risland Homes has a short list of preferred mortgage lenders you may wish to connect with as well.

While you’re shopping, don’t be afraid to ask questions about the different types of mortgage loans in Texas. You’ll never know if you don’t ask!

While you’re shopping for mortgages, you’ll also want to be shopping for the home of your dreams. Here at Risland Homes, we can help you with that! Head on over to our Contact Us page to learn more!