Navigation Home Three Ways to Save on Your Home Loan Frequently Asked Questions
Choosing the Right Loan Minimizing Closing Costs
Select Service:
Property Type:
Credit Rating:
Two wooden chairs pointing towards a house.

Choosing the Right Home Loan

Taking out a home loan is probably the biggest financial decision you'll ever make. Use our informative guide to help you choose the home loan that's right for you.

Home Loan Features

When it comes to online home loans, you almost have to learn a second language to decipher all the new terms and acronyms that come with the territory. The world of mortgage loans can be a confusing one, but you can make the most of your experience by making some important decisions ahead of time. Understanding the following features will help you navigate home loan shopping with tremendous ease.

  • Fixed vs. adjustable rates. Fixed-rate online home loans have an interest rate that will remain constant for the entirety of the loan's term. Adjustable-rate home loans have an initial fixed-rate period, followed by a longer period where the interest rate fluctuates according to market conditions. Adjustable-rate mortgages can usually offer lower initial interest rates than fixed-rate loans and are your best option when interest rates are high. If interest rates are low, you want to lock in this rate permanently with a fixed-rate loan.
  • 15-year or 30-year term. How long the term of your online home loan should be will depend on your cash flow. If you can afford to make higher payments over a shorter period of time, you should opt for a 15-year term because you will save thousands of dollars on interest. Homeowners who are just starting out in their careers and want to minimize their monthly payments may opt for online home loans with 30-year terms instead. Remember you can always refinance to a shorter term down the road.
  • Understand APR & PMI. These are two very important acronyms that you will see as you shop for home loans online. APR stands for annual percentage rate, a figure that encompasses the loan's interest rate, closing costs, and all other fees and charges. APR is the best way to compare different online home loans because all lenders must compute APR the same way. Private Mortgage Insurance (PMI) is a fee you will pay if your mortgage loan exceeds 80% of the home's appraised value. In other words, if you make a down payment of less than 20%, you will end up paying PMI.
  • Finding the right lender. You will greatly increase your chances of finding a good lender if you shop around for online home loans. We make this easy on our site by giving you several offers from which to choose at once. Most lending experts suggest that you get at least three or four quotes on home loans before you commit to a lender, and we will give you at least four different quotes. Also remember to check out the prevailing interest rate. This will help you determine which offers are the most competitive.