I am a first time home buyer. What is the best way to shop for a home loan? I have been on the job 8 years, make $117,000 per year, have excellent credit and I have 20 percent down on a mortgage of $417,000.
Great, it seems like you have definitely been doing your homework. A great place to scout out local mortagage rates is the real estate section of the Sunday Globe. There is usually a half page listing of 20 to 30 lenders with their contact information and current rates. This information is also available online.
Rates continue to drop and it looks like you might be able to get a 30 year fixed rate of 5.5 percent with no points if you shop around. If you are willing to pay a point, some lenders are offering rates as low as 5.25 percent. Some 15 year fixed rates are around 5.125 percent with no points.
You can also compare rates online using sites like Bankrate.com Unfortunately, you will probably have to do a lot of old-fashioned calling around because rates can change very quickly. You might see a great rate in the paper this morning but by the time you call the next day, another rate may be in effect.
In your case, a 30 year $417,000 mortgage fixed at 5.5 percent would have a $2,367 per month principal and interest payment. At your income level, a principal, interest, taxes and insurance (PITI) payment of $2,730 per month would be considered affordable.
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