A Primer on Austin Mortgages

After all the exhaustive legwork and negotiating that's involved with buying a house, probably the last thing you want to do is jump right back into the fray and start weeding through the overwhelming assortment of Austin mortgages that are available. And that's exactly why so many homeowners end up in hot water. Just remember--your home loan will likely be a part of your life just as long as your house will, so you should exercise the same diligence and scrutiny when selecting it.

Making Sense of It All

There's no definitive answer as to which of the many Austin mortgages are best; it depends on the specific needs of each borrower. Among the factors used to determine this are the individual's annual salary, monthly budget, amount of cash available for a down payment and amount he or she expects to remain the house. For example, the best bet for a first-time homebuyer who doesn't have a lot of cash might be an FHA, or Federal Housing Administration, loan. Subsidized by the government, this loan helps people get into homes with a down payment of just 1 to 3 percent. Furthermore, it makes allowances for borrowers with less-than-perfect credit and allows for the inclusion of closing costs in the borrowed amount. On the other hand, while the interest rates attached to FHA loans are usually very reasonable, homebuyers who can afford a bigger down payment can probably get a better deal with another loan package.

The most common, and certainly most reliable, of the many Austin mortgages you'll likely be presented with is a fixed rate loan. With an interest rate that remains the same throughout the life of the loan and across-the-board standardized terms, there's no risk of being socked with hidden costs or escalating payments. People looking for lower monthly payments early on might feel more comfortable with an ARM, or Adjustable Rate Mortgage. Available in several different packages and with a variety of terms, an ARM features a fluctuating interest rate that starts out lower than that of a fixed rate loan, but can eventually end up higher. Do determine what's right for you, talk to your lender or enlist the services of a mortgage broker.

Deciding Factors

By law, lenders are required to give you an APR (Annual Percentage Rate) breakdown when giving you a quote. This spells out the exact amount of interest you'll be paying over the life of a loan, which, in theory, should provide homebuyers with an essential tool when comparing one loan to another. However, because the government placed no defining standards on what costs qualify as financing fees, the actual dollar amount could very well be higher than the one cited on the APR. Furthermore, it could vary from lender to lender. So, to make sure the Austin mortgages you're considering are on a level playing field, it's a good idea to ask each lender for a good faith estimate of all fees associated with the loan.

Protecting Yourself

Once you've settled on one of the many Austin mortgages that are offered to you, an important question to ask your lender is whether the rate is locked. With interest rates constantly changing, a rate lock guarantees that the number you were quoted when you selected the loan will still be the same when you close the deal. While this protects you from being saddle with payments you can't afford if the rates go up, there's always a chance--especially in today's economy--that rates will have dropped in the typical 30-day period it takes to close the loan. Although you'll still get the rate you were quoted, knowing you might have gotten a better deal can be a little frustrating. To leave your options open, you might want to ask your lender about attaching a float down to your rate lock. With a float down, your initial quote remains locked if rates go up, but the lender agrees to match the going rates should they be lower at the time of closing.