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2c. Loan Shopping

December 10, 2023 - 10:35 AM EST

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2c. Loan Shopping

That's right, shopping. The days of limited information and even fewer loan sources are long gone. Based on your individual requirements, our agents can help you determine which loan program might be best suited for you before contacting an appropriate loan specialist.

We recommend using specialists because there are thousands of loan programs available and they're always changing. In our experience, loan brokers that specialize tend to provide a higher level of service and expertise and can better match you to the best performing package for your needs.

Fixed or Adjustable?

The type of loan that'll best fit your current and future financial obligations may depend on many factors. The most important of which is likely to be how long you expect to own the property. For instance, adjustable rate mortgages can be great for buyers planning to sell in 4 years or less. However, particularly in light of the predicted rise in interest rates, a fixed rate package will make more sense if you're buying a longer term family homestead.

Points or No Points?

One point equals 1% of the total loan amount. It's an upfront fee that reduces your interest rate and total interest due over the life of the loan. Paying points to lower your interest rate is a trade off between the cost of paying money now versus saving money later.


Like points, a buydown is an upfront fee that reduces your loan's interest rate. But where points reduce the rate permanently, a buydown reduces the rate temporarily. The 3-2-1 buydown is a popular program which gives you 3% off the base rate in year one, 2% off the base rate in year two, and 1% off the base rate in year three. Years four through loan maturity are at the base rate (the rate you'd have had all along were it not for the buydown).

Veteran's Administration Loans

VA loan programs are an amazing benefit for millions of qualifying Americans and their spouses who've served in the armed forces, reservists and guardsmen included. With benefits like little of no money down, relatively liberal qualifying guidelines, and the ability to let others assume the mortgage should you wish to sell, this is a benefit you can't afford to miss. Our Agents can help you determine if you qualify and the amount of your eligibiilty.

FICO to You Too

No, it's not an old world insult, it's a credit score created by Fair, Isaac & Company to measure your credit worthiness. It can affect how much you pay for a loan, among other things. For example, some lenders will reduce the interest rate by a quarter point if your FICO score is greater than 725. A bad FICO score can mean as much as 3% higher interest rate compared to a good score! Luckily, there are some compensating factors including a larger down payment, low debt-to-income ratios, an excellent savings history, etc.

Be Good to Your FICO

  • Excessive credit inquires while shopping for a loan will lower your FICO score slightly. Enough to make things worse if your score is already marginal.
  • Buying big ticket items, such as a car, before buying a home raises your debt-to-income ratio, which lowers your overall FICO score. Just multiple credit inquires from car dealerships will lower your FICO score, even if you don't buy anything!
  • Recent late payments can be devastating to your FICO score, sometimes even more than a bankruptcy from several years back and perfect credit since.
  • Paying off credit cards with recent late payments will not improve your credit score.
  • Opening new revolving credit accounts, closing seasoned accounts, or balances near the credit limit will lower your FICO score.