Home loans can be available from several types of lenders--thrift institutions, mortgage companies, commercial banks, and credit unions. Various lenders may quote you different prices, so you should contact several lenders to make sure you’re getting the best price. You can also get a home loan through a mortgage broker. Brokers set up transactions rather than lending money directly; in other words, they will find a lender for you. The broker’s contacts to several lenders can mean a bigger selection of loan products and terms from which you can choose.
There are many factors to consider when looking for a home
Types of homes - There are many different types of homes: single family, condominium, townhouse, and duplex. Additionally, the type of home you select may impact your buying power.
New or existing home - Consider whether you want to move into a new home or an existing home. In general, new homes are more costly than existing homes. However, the condition of an existing home can significantly increase your maintenance requirements.
Quality of home - Examine the condition of the home. Carefully inspect the structure, interior and exterior of the house for defects. The additional renovation costs may add up over time and exceed your maintenance estimates. Will the house need a lot of repairs? How old are the appliances? The purchase of the home is one step, but the renovations and repairs are added costs that need to be considered. Would you prefer to purchase a newer, costlier home or would you prefer to invest additional time and money into renovations and repairs for an older, less expensive home?
Features - Consider the features of the home. Does it have gas or electric heating? How many bathrooms does it have? How many bedrooms do you need? All of these characteristics will influence the price of the home and your monthly housing expenses. HUD's Wish List worksheet (A PDF Reader is necessary to view this file. PDF reader options for the visually impaired.) can help you identify and prioritize the features you are looking for in a home.
Location - Would you rather live in the city, the country, or the suburbs? Do you want to be near parks or the library? What about a shopping center? Is it important for you to be near major highways or public transportation? Get a feel for the surrounding area by exploring the neighborhood and talking to residents.
Crime rate - Look into the safety of the neighborhood. Does the neighborhood have a high crime rate? Has there been an increase in crimes committed in the area? If so, how will this influence the future property value of your home?
School system - The quality of the school system in a particular area is not only important to families with children but can influence the property value of your home.
Economic stability of area - The economic growth and stability of the area surrounding a home can influence its future property value.
Property tax - Examine the annual amount of real estate taxes and other assessments levied on homes in the neighborhood you are considering.
Brokers will generally make contact with several lenders regarding your application, but they do not have to find the best deal for you unless they are contracted with you to be your personal agent. You should also consider contacting more than one broker, just as you would with banks or thrift institutions.
Knowing if you are dealing with a lender or a broker may not always be cut and dry. Some financial institutions work as both lenders and brokers. And most brokers’ advertisements do not use the word "broker." So be sure to ask whether a broker is involved. This information is important because brokers are usually paid a fee for their services that may be separate from and in addition to the lender’s origination or other fees. A broker’s compensation may be in the form of "points" paid at closing or as an add-on to your interest rate, or both. You should ask each broker you work with how he or she will be compensated so that you can compare the different fees. Be prepared to negotiate with the brokers as well as the lenders.
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