When you work with the Heath Team, we’ll schedule a meeting to discuss the key components of selecting the best mortgage for your personal goals. Most people initially focus on the interest rate, which is a critical component of the loan, but shouldn’t be the sole factor of a final decision. When someone asks about the rate, typically they want to know how much the loan will cost. That is the question we drill down on with our meetings- what is the cost of this loan?
Here are the three keys everyone should understand when selecting their perfect home loan:
- How many funds will be needed for closing?
- How much is the monthly payment?
- How much will the loan cost over the time you expect to have it?
By balancing these three components, we can structure a loan to meet your short- and long-term plans. Every home buyer has different goals, so the Heath Team doesn’t take the easy route and provide you with only one solution. Instead, we look at the best options for the individual situation, sit with our borrowers to help them make good choices, and then explain the details so they clearly understand.
As an example, a 15-year fixed rate loan has a lower interest rate and is paid back over a shorter period than the equivalent 30-year fixed rate loan. However, the monthly payment is significantly higher. So, the interest rate is not the driving factor for some, if they cannot budget the payment into their lifestyle.
Recently, we worked with an active duty Air Force member moving to Tucson. His plan was to move back to his home state of Arkansas as soon as he separated from the military in 3 years. We were using a VA loan and he initially called for the best rate. After we met, he decided on a no closing cost loan with a higher interest rate. The tradeoff he made was:
- Higher monthly payment
- No money out of his pocket
- Over the 3 year life of the loan, he was saving money with this path
For someone with a longer-term plan for the home, they may want to increase their closing costs to get the rate even lower. Over the extended life of the loan, the lower payment would offset the additional funds needed at closing.
Individuals have specific goals and we can find the right solution to achieve them. Contact the Heath Team to get started today!