Ensuring You Choose the Right Mortgage

As more and more people are waking up to the possibilities of realizing the American dream of homeownership, a few facts are becoming clear.

One fact many prospective homeowners should know, for instance, is that the best time to look for a mortgage is before you look for a house. This way you'll know exactly how much you can borrow and maximize your negotiating power.

Remember, while the minimum down payment required depends on the mortgage program you select, at least three percent of the purchase price is usually required.

If you are concerned about having enough money to purchase a home you may want to consider rolling your closing costs into either your interest rate or your loan amount. You will still need to come up with money for your down payment but this will help reduce the amount of additional money that you will need to bring to close.

You should also understand how credit is calculated. The annual percentage rate, or APR, is a measure of the cost of credit, expressed as a yearly rate. To determine the APR, lenders consider the interest rate on your mortgage loan, the term of the loan and other loan fees such as closing costs, points, and so forth. When comparing loan programs based on APR make sure you ask each lender the criteria for determining the APR.

Your monthly payment is calculated based on the mortgage note rate, not the APR. The APR will be higher than your interest rate, especially if you are paying any points.

Points are a percentage of the loan amount paid at closing that affect your interest rate. For instance, on a $90,000 loan, one point equals one percent or $900. How it works is that if you pay points, you buy down the rate. Alternatively, in exchange for a higher rate, the lender pays points to offset your closing costs. These are considered negative points. Negative points may be a wise option if you have limited funds to use at closing.

A great place to hone in on more information about mortgages is at www.century21mortgage.com. Century 21 Mortgage is one of the largest retail mortgage originators in the country. To find a real estate professional who can help you, visit www.century21.com.

A home of your own may be easier to have than you realize.

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