First One There

The determining factors to whether or not you’ll get a cheap home loan vs. an expensive home loan really depends on what you can qualify for as well as how much you can “buy down” the rate.

There are other factors that influence your decision on what you would consider a cheap home loan as well. These other factors include things like how long you plan on spending in the house and how much cash flow you have incoming and how much is outgoing to cover the living expenses of a home.

There are many people that would consider a home loan to be inexpensive if it meant that they had a much higher quality of living if they were able to keep the amount of outgoing cash flow to a minimum even if that meant the rate of the home itself was higher.

So you can see just with a few different scenarios, there is a huge difference between what you would consider cheap and expensive when it comes to qualifying for a home loan. In any of these situations, however, there is a huge advantage to having a good credit score, maintaining this good credit score and having a good amount of money saved up in the form of a down payment. With these two main criteria, you’ll at very least have some solid options for what you will eventually decide on doing.

If your primary focus when evaluating the cost of a home is the home loan rates, you may be missing a portion of the big picture. I have known of individuals who will leverage some techniques when getting their loan that will reduce the amount of their outgoing cash flow to near 0 or at very least, the equivalent of a very small monthly rent payment, for usually 2 to 3 times the house.

Please don’t misunderstand as the home loan rate is an important component of the home purchasing process. The problem comes when the average buyer of a new home does nothing more than base their decision on which broker, lender or loan officer on which one is advertising the lowest possible rates. The fallacy in this is that those low rates that are usually advertised are reserved for those that have a very high credit score and income sufficient to justify the amount of home they are interested in purchasing. So just because a lender looks to have the lowest prices based on the ads you’ve compared, it’s worth looking into the overall cost of the home based on multiple inquiries.

The cheapest home loans are usually factored only on the going rate. Even after a pre-qualification, the responsibility rests with the purchaser of the home to look into multiple options. A new home loan is not the easiest thing to back out of once you are in, so make sure you’re working with someone you can trust. This can also be tough at times, but get recommendations from friends, family, or even colleagues of who be able to give you some good advice.

Although tough to get out of, a home loan can turn into a refinance home loan usually in as little as 3 to 4 months after the initial loan closes. The main effect this may have on you as an individual is multiple inquiries against your credit. These can cost you a couple points per instance depending on which credit bureau the lender is referencing. These inquiries don’t always reduce the credit score and even if you shop around, there is a good likelihood that multiple inquiries in a short period of time represent just such an instance of shopping around for a new loan, whether this is a home loan, or even an auto loan, etc. Credit bureaus have adjusted their factoring for these multiple query instances and have a reduced effect on your score over time.

Cheap home loans are based on multiple factors, not just the rate alone. Take into consideration the duration of your stay or expected duration of your stay in a given home before getting into a longer term situation having put a lot of money down to “buy down” the rate.