The real estate market is constantly changing. From different interest rates to changes in a home’s equity value, staying up to date on all the nuances of the mortgage industry should be left to the professionals.
That is where our experienced team here at Penn Street Mortgage can help! As expert mortgage brokers in the Philadelphia area, we are here to give you the knowledge and tools you need to make confident and informed financial decisions with your home purchase.
During the mortgage process, we will ensure you understand all the different factors you should consider when comparing mortgage loans for your home purchase. Our goal is to make your dream home affordable and attainable with the right mortgage.
Here are a few things to keep in mind throughout the whole process of the home-buying process.
1. Mortgage Type: Conforming vs. Non-conforming
One of the first things to understand is the difference between conforming and non-conforming mortgages.
Conforming loans follow the guidelines set by Fannie Mae and Freddie Mac — two government-sponsored institutions that guarantee mortgages. A conforming loan has guidelines that specify the requirements needed to qualify, including the loan amounts and borrower’s credit scores. One of the main advantages of a conforming loan is these loan programs typically have lower interest rates.
On the other hand, non-conforming loans are those that fall outside these regulations, like jumbo or subprime loans. Jumbo loans are the most common type of non-conforming loans and are usually for higher-priced properties that are above the loan limit set by Fannie Mae and Freddie Mac.
While the majority of mortgages are conforming loans, a mortgage professional can help you identify which type of home purchase loan you would qualify for.
2. Loan Structure: Fixed-rate vs. Adjustable-rate
Based on the interest structure, mortgage programs can be fixed- or adjustable-rate mortgages (ARMs).
A fixed-rate mortgage has the same interest rate for the entire loan term, which provides borrowers predictability each month about how much their mortgage payment will be. Alternatively, ARMs have interest rates that change over time, usually starting with a lower rate initially but increasing after the introductory period.
Deciding between a fixed-rate interest rate or an ARM can depend on the overall mortgage market and your specific mortgage needs. If you plan to sell your home within the first five years, an ARM could be a good fit, but for the long term, a fixed-rate rate can make budgeting for your mortgage easier. Speak with a mortgage broker to see how your personal circumstances impact the loan options to explore.
3. Loan Term
When you are getting a mortgage, one of the most important decisions you will make is the length of the loan. The standard term for home loans is 30 years, but there are also shorter 15-year options available. The length of your mortgage loan is a big decision since it will impact your monthly payments and total cost in a significant way.
Shorter terms, like 15-year conventional loans, usually offer the lowest interest rates and the ability to build equity faster. Since you are making larger mortgage payments each month, you will pay less in interest overall and build equity faster. But a shorter term also means a higher monthly payment, which can be a challenge for some people. If you opt for a longer 30-year mortgage, you will have lower monthly payments but pay more in interest over the length of the loan.
4. Interest Rates
One of the biggest factors in your monthly payments is the interest rate of your loan. While there are several things that dictate your potential interest rate, ultimately, it is determined by your credit score and the overall market conditions.
However, working with mortgage brokers like Penn Street Mortgage gives you access to the best available interest rate comparisons since we can compare loan options from multiple lenders, giving you a clear picture of what you can qualify for. You can use our free tools to calculate how current interest rates can impact your individual mortgage terms.
Our mortgage professionals can help you shop around for the most competitive interest rates and provide mortgage advice on qualifying for better terms.
5. Down Payment
The amount of money you have to offer for a down payment can impact several aspects of your mortgage, including the loan amount, interest rate, and whether you will need to pay for private mortgage insurance (PMI).
The bigger your down payment is, the lower your monthly payments will be, and you might be able to qualify for better interest rates. Speak to one of our Philadelphia mortgage advisors to understand how your down payment can impact your approval process.
6. Seek trusted mortgage advisors
Buying a home is a major purchase, and working with trusted mortgage professionals like our team at Penn Street Mortgage can help you save money and ensure you are making a wise financial decision. From navigating refinance rates to setting a monthly budget, a mortgage professional can make the home buying process smooth and seamless.
Penn Street Mortgage | Your Trusted Mortgage Broker | Philadelphia mortgage brokers
At Penn Street Mortgage, we are here to help you make sense of the mortgage process. Whether you are a first-time homebuyer or a real estate investor, having the knowledge to navigate the mortgage process can help you feel more confident and empowered during the home purchase process.
We know that each mortgage client is different, and there is no one-size-fits-all home loan. We are here to find the best mortgage loan for you.
Contact Penn Street Mortgage brokers today to get started on a pre-approval process. With fast funding options and great communication, we are here to help you achieve your financial goals.
