Mortgage lenders offer a staggering variety of products, each of which can dramatically impact the final price of your home. The selection of home loans available can make purchasing a house confusing, especially if you’ve never been through the process before. Understanding a few key elements of the industry can help ensure you get the ideal mortgage. 

Choosing a Mortgage for Your First Home

1. Understanding Fixed & Variable Rate Loans

Fixed-rate loans typically have terms of 15 to 30 years and have interest rates locked in for the duration of the loan. Because the rates are fixed, these mortgages insulate you from interest rate increases in the future and can help plan your household budget. Adjustable rate mortgages, on the other hand, typically have lower rates for a fixed term, after which the interest may change every year. If interest rates are expected to drop or you plan to sell within the fixed-rate term, an adjustable rate mortgage may be right for you.

2. Choosing a Term

As a general rule, the shorter the term of the loan, the less total interest you’ll pay. A 15-year loan, for instance, carries less interest than a 30-year mortgage with similar rates, but the monthly payment may be higher. To reduce the cost of buying your first home, you may want to consider taking the shortest-term loan you can afford.

3. Exploring Lending Programs

In addition to private mortgages from lending institutions, the FHA offers a variety of programs designed to make homeownership more obtainable. Qualified borrowers may be able to obtain a mortgage for as little as 3.5% down, leaving you more money to renovate your new home.

If you’re hunting for your first home in Lincoln, NE, the mortgage loan officers at the Spirit of America Federal Credit Union will guide you through the options and help you choose the loan that’s best for you. They combine the technological ability of a larger bank with the personalized service you’d expect from a small local lender. Visit their website to learn more about their mortgage loans, call (402) 467-1102 to make an appointment, and follow their Facebook for news and updates.