The air is full of excitement as you start your new home shopping endeavors.  The one item that can take the wind out of the sails of excitement would be shopping for a home loan. Watching out for just a few items while shopping for a home loan can assist in reducing that final sticker shock at signing. Why not peek at just a few items to consider while shopping for a home loan.

Do some shopping
Buying a home could be one of the biggest purchases you ever make. Shop around for that mortgage. This will allow you to pit lenders against one another. A lender might tell you they are offering you their best deal. That is until you bring in a competing lenders offer. It is amazing at how the tune will change when you have an offer from the bank across the street.

Rates
Ask all the lenders what their rates are. You will need to know if this rate is a fixed or adjustable rate. Remember that adjustable rates are what got so many people in financial trouble. Find out what the high end of your payments will be on and adjustable rate mortgage. You do not want to be in your home for five years and end up with a mortgage payment that you can no longer afford.

Points
Points are fees the lender collects on your loan. Your interest rate will most often be linked with how many points you have paid. It can be to your advantage to pay more points up front to have a lower interest rate in the end.

What fees will you be dealing with
Just because you are going to pay this lender for a decade or more does not mean they are not going to get all they can out of you. Keep in mind the lender can charge fees such as loan origination, underwriting, closing costs, and many more. Ask your lender to give you all the costs you will incur at the time of closing. Keep in mind that these fees will vary from lender to lender.

Down payments are your friend
You will be hard pressed to find a lender that will loan you 100% of your home loan these days. You will need to save up at least five to ten percent for a down payment. This not only looks good to the lender, but it can also help reduce your final closing cost fees.

A fee hidden away with down payments is PMI, or private mortgage insurance. Some lenders can add this on for borrowers who do not provide a 20 percent down payment. This little add-on protects the lender in the event you fail to continue making your mortgage payments.

Knowledge is power, and now you have the power. You have the power to help reduce the final cost of that home loan. You do not want that first home loan payment to be something you dread. Besides, you want to be spending money improving the house to your tastes. Keep all the money you can in your pocket and out of the lenders!

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