How to Choose a Loan Program That's Best for You
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Choosing a Loan Program That is Right for You

James Crandall

November 1, 2021 · 6 min read

choosing a loan program

Not all loan programs are the same or meant for the same situation. Everyone has a unique financial situation and knowing the type of loan that works best for you ensures you get the best deal.

Before you lock in your mortgage loan, read about how to choose a loan program that’s right for you and what to look for in a lender.

How to Get Started Choosing a Loan Program

Before you decide on a loan program that’s right for you, follow these few steps to put your best foot forward.

Assess Your Situation

Before you secure a loan, you need to assess your financial situation to understand what you can afford. This will help narrow down the options for the loans in which you will qualify for.

All lenders will analyze your financial history before approval, so it’s best for you to do an analysis first to ensure no time or money is wasted when applying for loans. Assessing your situation means asking questions like:

  • How much home can you afford?
  • What will payments be like?
  • Why are you buying the property?
  • Is it a forever home or just temporary?

Defining Your Options

As you’ve probably noticed when looking for a mortgage loan, there are a lot of different home loans you can qualify for. While we won’t get into the nitty gritty of each loan, it’s important to know all of your options and which loans you can qualify for to maximize your savings. 

Here’s a list of some of the most common types of mortgage loans 

  • FHA loans 
  • USDA loans 
  • VA loans
  • Conventional loans
  • Hard money loans 

Some loans have more benefits than others. For example, a Veteran Affair (VA) loan doesn’t require a downpayment but it’s only accessible for veterans. If you qualify for a VA loan then we highly recommend it.

Once you find a loan program that you like, you should start to consider mortgage rates, term length, and mortgage insurance (if it’s required). Do you want a 15-year or a 30-year term? A 15-year mortgage will have higher monthly payments but you’ll pay the loan off faster saving thousands of dollars in interest payments. 30-year mortgages have lower monthly payments but take longer to pay off increasing the interest paid over the course of the loan. 

Interest rates are another factor you should consider when looking for a mortgage loan but they are subject to change. Depending on the state of the economy and how much you are putting down initially, they may increase or decrease. 

If you aren’t sure what a good interest rate is, schedule a meeting with one of our team members. 

Compare Lenders and Estimates 

Finding the best deal on a loan can save you a lot of money! And the only way to find the absolute best deal is to shop multiple lenders and estimates.

Once you know which type of loan you are looking for, speak with several different lenders to compare who has the best rates. Remember to obtain quotes from both traditional lenders and private lenders. Doing so will open up a world of options you may have not known was available to you. For example, you may find that one lender has a low rate, but fees are costly.  

When finding the best lender to work with, look at the rates, fees, and terms of each lender and loan.

What to Look for in a Lender 

While each situation presents unique challenges, there are certain qualities you should seek out in a lender. First and foremost, you want a lender that is reliable and trustworthy – someone who will keep their word and do what they promise to do.

You also want a lender with experience. Experience is more than just the number of years in an industry, it’s also the knowledge that they bring. You want someone who has worked through numerous situations and knows exactly what to look for.

Additionally, you want a private lender with a good track record and great customer reviews. Reviews show you how lenders handled situations just as unique as yours. And finally, you want someone with exceptional customer service. A lender that is willing to walk you through the entire process and communicate directly with you is worth the time to find.

tips to choose a loan lender

Tips for Choosing a Loan Program

Here are a few tips to help you choose a loan program that’s best for you!

1. Think beyond the monthly payment 

Aside from the initial monthly payment, do you know the terms of your loan? For example, if you chose an adjustable-rate loan over a fixed-rate, your interest rate is likely to increase over the years. There are several loan types with these hidden agendas that show a lower monthly payment, but a higher overall cost.

2. Don’t bank on being able to refinance your home

Refinancing after owning a home for a few years can often be beneficial for borrowers. For example, if you obtain an FHA loan where you’re required to pay mortgage protection insurance, within a few years, you can often refinance and get rid of that extra payment.

However, it’s important to know how refinancing works because it’s never guaranteed. Refinancing relies heavily on the economy – which impacts your home value, interest rates, and ultimately your income. You still have to meet requirements to finance your home. Plus, if interest rates are higher than what you initially locked in, refinancing will not be beneficial to your situation.

3. Ask about first-time home buyer programs 

Many people don’t realize that you don’t have to be a “first-time” buyer to qualify for first-time home buyer programs.

Most government programs consider you a first-time buyer if it’s been three years since you’ve owned a home. There are also programs like USDA and FHA loans that require the property to meet specific qualifications before qualifying.

There’s no denying the fact that choosing a loan is one of the most important factors in the homebuying process. Your loan and its terms affect everything. That’s why it’s essential to work with a lender that cares about your unique situation.

When you sign up with Yieldi, you receive guidance through the entire process and peace of mind that you’re making the right decision. Yieldi has a loan program that is right for you and we’re ready to help you get your loans closed in as little as 5 days.

View our loan programs and see how we can help you today.

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