Finding a Lender
Lenders can be found through a variety of sources, with the most common ways being the internet and referrals from your realtor. We would be happy to suggest lenders we have used previously who have proven themselves competitive and capable, even with difficult properties or poor credit.
Choosing the Right Lender
Interview several lenders and evaluate the following:
- Ability to explain the process and requirements clearly and return your phone calls and email in a reasonable time period
- Competitiveness of interest rates, costs and fees
- Availability of loan programs that suit your credit profile and desired property
- Access to a local loan approval committee that understands the kind of property you are buying
Choosing the Right Kind of Loan
There are so many types of loans on the market right now it would be impossible to list them all here. The variety of loan types can also be confusing, but your lender will help you select a loan program to best suit your needs. Below is a summary of three most popular loan types we see in practice.
- Fixed loan: The fixed rate loan assures your monthly payments will stay the same over the life of the loan, which is typically between 15 and 30 years. Fixed rate loans may be best if you intend to hold the property for a long period of time (7 years or more).
- Adjustable Rate Mortgages (ARMs): ARMs may be suitable if you plan to sell or refinance your home within the next few years. The starting interest rate is typically lower than a fixed rate loan, saving you money initially. However, it is important to understand the index, the readjustment interval, the capitalization rate and downside risks of an ARM before selecting this type of loan.
- Intermediate ARMs: Also called hybrid loans, these loans offer fixed interest rates for the first 3, 5, 7 or 10 years, after which the interest rate adjusts with the market every 6 months or year thereafter.