The Best Home Loans...

What is the best home loan? 

If you are uncertain about what the best home loan is many people will offer their opinion to help you decide. 
Friends, neighbors, co-workers and relatives will all offer different advice and help point out how to get it. 
Real estate professionals and loan originators will offer their opinions as well.      

With all these opinions is there one right answer...is there a best home loan?  Yes.

The best home loan is the one you qualify for based on your unique set of circumstances. 

It may not be the same your neighbors or relatives have personally or even recommend.  Or it may be the same type of loan others have but at a different interest rate or cost.  Why would you settle for something different or that cost more?  Simple, it's what you are approved for given your current needs and qualifications.  Well then, how do you determine what you will be approved for?

The three "C's" are still the determining factors in what most people will qualify for.

Credit - Primarily represented by your numerical credit score.  Your credit rating, a reflection of how you managed your past obligations, helps creditors determine your creditworthiness.    

Capacity - Your ability to repay the new loan obligation.  This is typically measured by your debt-to-income ratio (your total monthly debts relative to your gross monthly income).  The ratio is often offset by compensating factors such as assets, type of employment and time on the job.
 
Collateral - The subject property that will serve as collateral for the loan.  There are two important factors:  the equity in the property and the type of property.  Another factor is whether you intend to occupy the property as a primary or secondary residence or if it will be an investment property.

With all these factors how can you tell what you qualify for?

Move past the qualification stage and obtain an approval from a professional originator. 
They will verify your personal information: income, assets and credit. 
Furthermore, a professional will explore your intentions including your short and long term goals regarding the home and the mortgage financing. 

Your goals are discretionary questions that materially affect the underlying programs... 

How long do you plan to stay in the home (job transfer/children/cost)? 
Do you anticipate any change in income or credit rating - positive or negative (promotion/transfer/layoff/debts)? 
How can you be expected to know all these things?  You won't.  A professional originator will present several options that provide solutions for various scenarios.  An explanation of the resulting consequences with each option is warranted.     

For example, while most people prefer a fixed rate mortgage many times it's not the best option.  Lower monthly payment options are available with adjustable rate mortgages.  This is particularly true for those with credit challenges and First Time Home Buyers. 

Determine what is more important long term payment stability or lower initial payments (cash flow). 
Don't get me wrong there are no right or wrong answers only factors to consider prior to selecting a program. 

So, regardless of what you've heard about mortgage financing remember everybody has a truly unique situation. 
Make sure to obtain an approval based on your qualifications and explore all your options including the consequences.