What to Look for in a Low Interest Home Loan

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I should just take out a low interest home loan, right?

What to Look for in a Low Interest Home Loan

When you look for home loan rates, don't be fooled by seemingly low interest mortgage loans--a low upfront rate doesn't necessarily mean you've found the best deal. In fact, when you find a low interest home loan, you may end up stumbling into a potential minefield. When comparing rates and considering a low interest home loan, be sure to watch for the following:

  1. Early payment penalties: Some loans penalize borrowers who pay off their balances early. Be sure to avoid these so you have the freedom to pay your loan off early or refinance without penalty.
  2. Adjustable Rate Mortgages (ARMs): Your initial loan rate may be low, but if you sign up for an adjustable rate mortgage, your low rate isn't locked in for the life of the loan. As a result, you could face substantial increases in the future.
  3. High closing costs: Closing costs are often a fact of life when looking for home loans, but they don't have to take that big a bite out of your bottom line. Be wary of a low interest home loan with very high closing costs. Try to negotiate the costs or look for something more reasonable.

   

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