Types Of Home Loans
For many people, home ownership is a vital part of the American dream. If you've been saving and are now ready to become a homeowner, you may be getting ready to take the next step, which is applying for your loan. But when it comes time to select a lender, where do you go?
When looking for a lender, you have literally dozens of reputable resources available. However, it pays to be selective. The fact is, there isn't a single source that is best for everyone, and not all lenders are created equal. To help you learn more, we've put together a basic rundown of three of the most common lenders you'll likely come across in your home loan quest.
1. Banks & Credit Unions
Banks and credit unions are often the most common route new home buyers take when shopping for a home loan. Because most of us work with some type of financial institution, we tend to gravitate to the local banker that we can sit down with on a face-to-face basis. Most of the time, you'll be able to secure some pretty competitive rates, especially if you are an established customer with a decent credit rating. However, the variety of loan selections may be limited, leaving you with few options if one particular loan (or interest rate) doesn't fit your new home budget.
In contrast, brokers often have a variety of loans from which to select, including programs for first time home buyers and buyers with less than perfect credit. Because they aren't limited to one financial institution, they can be a type of one-stop-shop, allowing you to compare rates from several sources. However, brokers tend to charge higher lending fees compared to banks and credit unions.
3. Online Lenders
The Internet has opened up a virtual floodgate of resources for consumers looking for new home loans. Not only does shopping online provide you with one of the largest selections of loans with a click of your mouse, it makes it easy to compare rates without having to drive around town or schedule an appointment with a lender. However, if you're the type of person who prefers working with a person face to face, then you may not prefer to shop for loans online. Although, if you find a lender online that offers a good program that you can't pass up, inquire about the availability of a local branch.
Remember, you're not obligated to any particular lender when shopping around for a new home loan. Take your time, ask questions, and see what may be a good fit for you and your new home budget!