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Choosing the right residential loan program

Posted on Monday, June 27, 2016 at 1:35:54 PM

Today's lending environment is abundant with diverse options for residential financing programs, which can be a doubled-edged sword of sorts for home buyers. On one hand, the variety of loans available allows purchasers to get one that closely aligns with their objectives and intentions but, on the other hand, it can be difficult to sift. 

The first step toward acquiring the right financing program is to ask the right questions. The prospective home buyer will need to first establish the monthly budget for a housing payment, which is not necessarily the same as what they will qualify for. In fact, it is rare that these two matters would match. The process then becomes a matter of balancing the budget, using a loan program to either completely finance the purchase - including the down payment - with higher monthly payments but more cash in the bank, or putting that money down and having lower payments. 

Another important question centers around the goals of the property purchase, and homeowners need to have an idea of how long they are planning to live in the house ahead of the loan application. When only intending to own the home for five years, for example, a program that comes with a higher rate but no private mortgage insurance would be the right move. If intending to hold on to the house for a longer period of time, the lower rate with PMI would generally be the best option. 

Obviously, there are many variables to obtaining a mortgage and, with so many options out there, it is always best to work with a lender that has the most options available to them.