Finding an Affordable Mortgage Loan

Securing a home mortgage is one of the largest financial transactions most consumers will ever make. But it doesn't have to be the most expensive. By following a few suggestions, you can make sure that your mortgage fits your budget.

A mortgage loan shopping primer

1. Shop around for lower prices. Variety is the spice of life. It can also save you money. The marketplace overflows with mortgage lenders- credit unions, bankers, mortgage brokers, and mortgage companies are all in the fray. Ask for referrals from trusted friends. Then do some legwork. Get quotes from four or five different lenders to find a trustworthy lender with a competitive price.
2. Keep score with your credit report. Nothing can jack up the interest rate on your loan like a low credit score. Order a copy of your credit report, and scrutinize it to make sure that all your credit information is accurate before shopping around.
3. Paying points may pay off. A point is equal to 1 percent of your total loan amount. Mortgage lenders will let you pay points to "buy down" or lower your interest rate. This upfront money-which you can roll into your loan-can save you money in long-term interest.
4. Adjust the loan option to meet your budget. If you want to keep things affordable, consider a mortgage option other than a 30 or 15-year fixed rate loan. Adjustable-rate mortgages offer low "teaser" rates for a limited time (generally 3-7 years), and adjust upward after the intro period has ended. It might be a good choice if the interest rate on a fixed-rate product makes the monthly payment out of reach. You can always refinance to a 15- or 30-year loan when rates get lower.

These simple tactics can help you find a home mortgage that fits your budget. If your credit report is in good shape, it can make the entire process even easier. By following the above steps, you may save some big money, and the process can be smooth as the peanut butter you spread on your bread.