WHAT LOAN OPTION IS BEST FOR YOU?

Posted by DB Wilson on Tuesday, September 7th, 2010 at 3:22pm.

For new buyers, the world of mortgages may be a little confusing and entirely overwhelming. If you are mortgage shopping for your first new home, you definitely want to get the lowest possible rate that your credit score will grant. While comparing rates and deals from various lenders, there are a few options and facts every consumer should consider. Percentage points are extremely important to consider, and buyers should absolutely seek the lowest possible rates they can find.

A 30-year fixed-rate mortgage of $400,000 at 4.3% would cost $1,979 per month, while the same loan balance at 5.3% costs nearly $2,221, according to numbers from Bankrate - a difference of almost $250 per month. Over one year, that 1% difference equals out to $3,000. Even small adjustments in mortgage rates can make a quite significant difference in monthly payments.

A 30-year fixed rate mortgage is a great starter mortgage for first-timers, but it is still recommended that consumers crunch the numbers to see what will work for them. A professional real estate agent can show you exactly how the numbers will play out; web-based mortgage calculators are also helpful.

If borrowers want to pay off their loans quicker than the standard 30 years, other options do exist, such as the 15-year fixed-rate mortgage. Adjustable-rate mortgages often have the lowest rates, but vary as the years go by. Most borrowers prefer the certainty of a fixed-rate.

Borrowers with a credit score is 740 or higher usually receive the lowest rates. Lenders also look at a debt-to-income ratio of applicants. If you are not pleased with the rates you are receiving, work on raising your credit score and paying off some debt before applying. Remember, every percentage point counts.

For more information on mortgage rates or raising your credit score, please contact any of our 89 professional real estate agents at 303-449-7000 or RE/MAX of Boulder, Inc..

RE/MAX of Boulder, Inc. located on the corner of Canyon and Folsom, is nationally and locally recognized as one of the most successful real estate offices in the industry. Nationally, they are one of the "Top 500 Power Brokers in the United States" as listed in both National Real Estate & Relocation and Real Trends magazines. Regionally, for the 3rd year in a row, the company has been named the #1 RE/MAX office in America for Single Office Closed Volume. They can be reached at 303.449.7000 or visit www.BoulderCO.com. Connect with them on Facebook and Twitter, search remaxofboulder.

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