How to choose the “right” Mortgage

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Titles can be misleading. The title of this article should really read “How to choose the right mortgage…for YOU.” What is best for your friend or your sibling may not be right for you. They may be in a different point in their career or family life than you. They may be a better “saver” than you. Or, and this is the most important factor, their goals may be different from yours.

First and foremost it is very important to make sure your lender offers a full range of products. Your favorite steakhouse may be great, but if you need to order pizza you probably went to the wrong place. Make sure your lender offers Conventional (Fannie Mae & Freddie Mac), FHA, CHFA, USDA, and VA. Also make sure that your lender explains the key differences between each product. You may have done some research on USDA loans, but if you are looking in an area that does not qualify for that product then you will need to go a different route.

Once you are preapproved you may find that you are limited in what product is available to you, and your lender should explain why. Conversely you may have the “Burden of Options,” meaning that you can qualify for multiple products/programs. This is where your goals really come into play. Your goal may be to bring as little money to the closing as possible. Your goal may be to have the lowest monthly payment as possible (usually you can’t have your cake and eat it too). Your goal may be to live in a certain town where the average purchase price may disqualify some programs. This is where having an open and honest conversation with a knowledgeable lending professional will help to set expectations and put you on the road toward the right mortgage for you.