If you’re buying a home for the first time, it can be easy to feel overwhelmed. There are a lot decisions to be made beyond which house you want to purchase, including everything from which mortgage to choose, to which mortgage lender to choose. One factor to consider is which mortgage makes the most sense for where you are in life.
How to Pick a Mortgage Lender
Given the financial commitment you are making in buying a home and getting a mortgage, choosing a good mortgage lender is essential. If you are working with a real estate agent to purchase a home, they may have suggestions of lenders they have worked with in the past. Whether you have recommendations to work with or not, do some research on what type of mortgage you may be interested in, then meet with several different mortgage lenders. In the end, it may not come down to which lender offers the lowest rate, but which mortgage lender you feel the most comfortable with – one who you’re willing to make a commitment to, and who will offer you trustworthy guidance.
Looking to start a conversation with a mortgage specialist? Call one of our mortgage phone specialists 1-877-729-4801 or use Santander Bank’s Mortgage Specialist Locator. Just enter your zip code, and Santander Bank will provide a list of advisors in your area, with contact information and areas of expertise for each.
Which Mortgage to Choose?
One way to look at mortgage options is to decide which mortgage meets your needs, based on your current place in life and where you are going. If you’re planning on staying in your new home for many years, you may want a different lending option than someone who is just starting out and may be moving in the future. Check out some of the mortgage options available, and see if one lines up with your needs.
Your Milestone: Looking for Stability
Mortgage Option To Consider: Fixed Rate Mortgage
You have chosen the location where you want to live, and you’re ready to make a commitment to staying there for a long time. If you value predictability and long-term stability, you may want to consider a Fixed Rate Mortgage. There are still a wide range of terms to choose from to meet your needs. But your monthly mortgage payment will remain fixed over the length of your mortgage, which can help as you budget for the future. Moreover, since your rate is locked in you’re protected long-term from changes in the economy that could otherwise lead to rising interest rates.
Your Milestone: Looking for Flexibility
Mortgage Option To Consider: Adjustable Rate Mortgage
There are a lot of instances where an Adjustable Rate Mortgage (ARM) can be advantageous. If you know that you’ll probably be moving or refinancing in a few years, an Adjustable Rate Mortgage is a great choice because it allows you to make lower monthly payments upfront. Or maybe you’re expecting your income to rise in the future and you’re still paying down loans from college or on a car. You know you’ll be able to afford higher mortgage payments in the future, but you don’t want to have to put off buying a home. Adjustable Rate Mortgages will give you the lower upfront payments you need, paired with an interest rate cap limit (typically 5% over the start rate) so that your monthly payments won’t skyrocket over time.
Your Milestone: Looking for Low Upfront Costs
Mortgage Option To Consider: Pairing Your Mortgage with an 80-10-10 Combination Loan or the H.O.M.E. Program
Sometimes a 20% down payment isn’t in the budget. Whether you’re interested in a Fixed Rate or an Adjustable Rate Mortgage, there are ways to lower your down payment and other upfront costs.
One option to consider is pairing your mortgage with an 80-10-10 Combination Loan, which combines your mortgage with a home equity line of credit. This allows you to pay a lower down payment, sometimes as low as 10.01%, and also enables you eliminate the need for Private Mortgage Insurance. Plus, you may be able to take advantage of tax-deductible interest on both your mortgage and home equity line of credit.
Another option available is the Home Ownership Made Easy (H.O.M.E.) Program. The H.O.M.E. Program requires no borrower funds on single-unit residences, and down payments as low as 3% for two- to four-unit residences. Additionally, you may use alternative sources to fund your down payment, including gift funds, grants, or a secured loan.
If you know you have a large expense coming up and can’t put all of your funds into a down payment, an 80-10-10 Combination Loan or the H.O.M.E. Program may be a good choice for you.
How Do You Get a Mortgage?
Whether you’re ready to take the plunge or you’re still in the research phase of buying a home, it’s always best to have as much information as possible. Learn more about your mortgage options from Santander Bank.