Your Guide To Finding the Best Home Loans in Contra Costa County!
At Shell Western States Federal Credit Union, we know how hard it can be to find the best mortgage loan lenders. As your local credit union, we are here to help! We know that purchasing a home is one of the biggest investments you can make, and we want to help you make that investment (especially if it’s in the East Bay Area).
If you’re looking for help getting the best mortgage loans and connecting with the best mortgage lenders, then this guide is for you. You’ll learn about the different types of mortgage loans on the market, what to consider when looking for a lender and other homebuying costs to expect besides the mortgage.
Know the Different Types of Home Loans
When buying a home, you'll also want to find the best home loan for your needs. While searching, you'll have different types of mortgages to consider. This means making sure you understand all your options. Here are some of the most common mortgages you’ll hear about:
Fixed Rate vs. Adjustable Rate
The two most common mortgage structures are fixed-rate and adjustable rate.
Fixed-Rate Mortgage: A Fixed-Rate Mortgage is the most common type of loan. This is the mortgage loan option you probably think of first. It has a set interest rate (also called APR or Annual Percentage Rate) based on your credit history, down payment, the amount borrowed and term length. You make monthly payments on both the principal and interest, and those payments stay the same over the entire life of the loan.
The most common Fixed-Rate Mortgage terms are 15 and 30 years. You'll usually get a lower APR and higher monthly payment with a 15-year term. 30-year terms have lower overall monthly mortgage payments.
Adjustable-Rate Mortgage: Similar to a Fixed-Rate Mortgage, an Adjustable-Rate Mortgage has a set amount you’ll pay monthly toward the principal, but the amount you pay toward interest can change periodically.
One type of ARM is the Interest-Only Mortgage. With this type of loan, you start by not paying anything towards the principal. For a set period of time, all your payments go towards the loan’s interest.
Let's say your interest-only period is five years. After five years of only paying interest, you’d start paying the principal loan amount as well. Often, interest-only loans are picked by those who don’t plan to live in a house long-term.
Conventional Mortgages vs. Government Loans
When looking into mortgages, you may come across the term “conventional mortgage.” This simply means that the mortgage isn’t insured by a government agency. Conventional loans are offered by banks, credit unions and private lenders and are available to the general public. Some lenders also offer government loans, which are insured by a federal government agency, such as the Federal Housing Administration (FHA) or U.S. Department of Veterans Affairs (VA). Government loans are available only to restricted groups—borrowers must meet eligibility requirements for these loans.
FHA Loan: FHA loans can give special financing options to first-time homebuyers, seniors, those purchasing manufactured and mobile homes and those looking to make their home more energy efficient. Typically, FHA loans come with lower down payment requirements, lower closing costs and more lenient credit requirements.
VA Loan: VA loans are available to veterans, active duty military personnel, reservists and National Guard members and some surviving spouses. VA loans have no required down payment, low interest rates, fewer closing costs and no need for mortgage insurance.
As mentioned before, there are a lot of mortgage types, so this list doesn’t include every type of home loan on the market. However, these are the most common types, so it should be enough to get you started.
Find the Best Loan for Your Needs
Odds are, there are a lot of mortgage loan lenders near you, so finding one is usually not a problem. The hard part is finding a lender that you’re happy with! Banks and credit unions are often the lenders for mortgages, so those are always a safe bet. If you're working with a real estate agent to buy your home, they might be able to make suggestions. However, there are also private loan companies and mortgage companies that you can work with.
Before you apply for a home mortgage, meet with a number of lenders. Talk about your circumstances and weigh all options before you decide where to apply for your mortgage. The right lender can save you a lot of money in the long run!
If you’re hoping for a consistent monthly payment and the rate feels right, a 30-year fixed-rate mortgage might be right for you. However, if you think rates could change for the better, you might want to consider an adjustable-rate mortgage. And if you already have a loan but you’re not happy with it, refinancing might be a great move for you.
You have to consider a LOT of factors when purchasing a mortgage. A large part of finding a lender is finding one that can meet your needs. Make sure you feel confident in the type of loan you’re taking out, your mortgage loan lender and, most importantly, the home itself.
Keep Other Homeownership Costs in Mind
Your mortgage loan isn’t going to cover the entire cost of homeownership. Here are a couple more expenses you should expect in addition to your mortgage:
Closing costs: There are a handful of various fees that fall into the “closing cost” category. This includes application fees, title transfer fee, insurance premiums and more.
Insurance: As mentioned above, insurance costs are something you’ll have to consider when you purchase a home. Homeowners insurance will be needed before closing, and private mortgage insurance (PMI) is usually required if your down payment is less than 20% of the purchase price.
Taxes: Property taxes are based on the value of your home and vary wildly depending on state, city and school district. Keep in mind that property taxes are always going to be a part of owning a home and that they tend to go up over time.
And with that, you should (hopefully) be ready to start shopping for a mortgage. If you have questions, reach out to us! We’re happy to find a loan program that matches what you’re looking for given your circumstances.
Our experienced mortgage team is one of the best mortgage lenders near you. We’re proud to be a long-standing source of financial help for our community. Hopefully, our work with the Bay Front Chamber of Commerce, the Martinez Chamber of Commerce and the Greater Concord Chamber of Commerce is proof!
If you’re ready to start your homebuying journey with us, check out our home loan services. Find more information on our mortgage services here: swsfcu.org/mortgage.
