The steady uptick in temperature ushers in more than just pool-side cocktails and barbeques. Itâ€™s the start of real estate season, and people are hitting the MLS and local Realtors in search of For Sale signs to lead them to their perfect home.
But before you move from hunter to homeowner, the mortgage industry must be conquered, and youâ€™ll have to get a home loan. The good news is that interest rates on mortgages are dropping, with CNN Money reporting 15-year mortgages with an average rate of 3.11%. The bad news is there are so many loan options available, you may have a hard time figuring out which one is right for your situation.
These short questions can help point you in the right direction instead of taking a stab in the dark. If youâ€™d rather view visuals, New American Funding created an infographic quiz that can help you find the right home loan though a series of short questions.
Howâ€™s your credit score?
- More than 640: Conventional Loans are your best bet because you can take advantage of the low interest rates and flexible payments
- Less Than 640: FHA Loans provide easier qualifying guidelines if youâ€™re credit score isnâ€™t great or you canâ€™t afford a large down payment.
How big is the home youâ€™re buying/refinancing?
- Less than 3 bedrooms: If your home is more than $417,000, double check your countyâ€™s maximum loan limits. For a lot of house, High Balance Loans or Jumbo Loans are your best option.
- 3+ bedrooms: If your home is less than $417,000, youâ€™ll fall into the amounts of FHA or Conventional Loan limits.
Would you consider yourself a risk taker?
- Absolutely: Adjustable Rate Mortgages (ARMs) give you a lower interest rate for the first 3-10 years, but it will adjust based on the market so if you can stomach the fluctuations, go for it and then go skydiving.
- No way: Nothing wrong with being conservative. Secure yourself with a Fixed Rate Mortgage so you know how much youâ€™ll be paying each and every month.