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Home Loans 101: What you need to know

Knowing where to start when buying a home can be confusing. Luckily, the awesome people at Michigan State Federal Credit Union can help every step of the way. They came by the show to explain all the steps future homeowners need to take before getting a loan to buy a home.

Compare lenders and mortgage loan products

One of the first steps to take when you want to purchase a home is to compare interest rates to find the best mortgage loan deal. According to the Consumer Financial Protection Bureau, 77% of homebuyers apply for a mortgage through only one lender. It’s important to investigate a variety of lending sources, including large and independent banks, credit unions, and mortgage companies. Then ask what types of mortgages they offer as well as other details of the loan such as interest rates, collateral needed, and credit score requirements.

Get preapproved for a mortgage loan

The next step is to obtain pre-approval for a mortgage loan. A mistake some first-time homebuyers make is to start shopping for a home and then apply for financing. Instead, shop for financing first. The lender will fully vet you for a mortgage and give you a preapproval letter for a specific loan amount. Preapproval can help you move faster when you do find the home you want. And with preapproval already in hand, you’ll likely be viewed as a more attractive buyer.

What to ask mortgage lenders

When comparing lenders, look for one that gathers enough information from you before recommending a particular type of loan. Ask about the pros and cons of fixed-rate loans, adjustable-rate loans, interest-only loans, and negative amortization loans.

Also, ask about the costs of the loan. These may include not only the fees that go to the lender, but costs of other services needed, including pulling credit reports, an appraisal, the lender’s title policy, pest inspection reports, escrow, recording fees, and taxes. A reputable lender will be upfront about all the costs involved.

What MSUFCU can do for you

At MSUFCU, we're here for you throughout every step of the home buying process. They make it convenient to apply for a mortgage: through their website, in their mortgage center, on the MSUFCU Mobile app, or at a branch. Next, you'll be assigned a mortgage officer who will let you know your preapproval information, as well as help answer any questions you may have about the process.

Once you're preapproved, enjoy searching for your new home with the assurance that your interest rate is locked in for 90 days. Choose from many options for your loan, including down payments as low as 3%, flexible terms ranging from 10 to 30 years, variable, or fixed rate mortgages, and more.

Whether you're buying your first home, moving somewhere new, or refinancing your existing home loan, MSUFCU is here for you with knowledgeable experts, options, and more.

For more information, visit msufcu.org.

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