What You Didn’t Know About Home Loans
A home loan, otherwise known as a mortgage, enables you to purchase a house without paying the full price out of pocket at the time of the purchase.
For most people, buying a home is the biggest financial transaction of their lifetime. For that reason, if you’re in the market for a new home, it’s best to learn all you can about home loans and how they work before you get too deep into the process. Choosing a trusted local partner like SCU Credit Union can make the difference. Our experienced staff will help you find the best financing option at the best rate possible. We know that every home and every buyer is unique, so let us get to know your story. We'll be with you every step of the way until you find that perfect home and for all the years you enjoy it.
Here are some things you may not know about home loans:
Rates fluctuate daily
Borrowers who are eager to secure a home loan with a low interest rate may get into the habit of checking mortgage rates as often as some people check the weather. Interest rates fluctuate every day, which means the rate you see today may be different than the one you see when you actually are approved for the loan.
The cheapest interest rate does not guarantee the cheapest loan
When choosing a lender, borrowers will often choose the one offering the lowest interest rate, but this can actually be to their detriment. There are other factors to consider, including comparing loan products and closing costs to decide which is the best option for you. Also, in adjustable-rate mortgages (ARM), the loan featuring the lowest interest rate may not have the lowest rate a few years down the line and may actually cost more in the long run.
A lower credit score can cost you tens of thousands of dollars in interest
Most people know that a higher credit score is generally awarded with a lower interest rate, but not many people know to what extent this is true. A low credit score can translate into tens of thousands of dollars in interest payments over the life of a home loan.
If you’re thinking of applying for a home loan soon and your credit isn’t in the “very good” category (higher than 740), it may be worthwhile to spend a few months working to boost your score before you apply for a mortgage.
You can have your mortgage payments automated
Your home loan payments will likely be your largest monthly bill, and missing a payment or paying it late can have serious consequences. Fortunately, you can avoid these scenarios by signing up to have your monthly mortgage payments automatically deducted from your checking account. SCU offers the option to set up an automatic payment in Online Banking.
Another great resource is the free ReadyNest Education Course from MGIC. The course takes about 45 minutes and ends with an "open book" test to review what you've learned.
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