Learn the most important things you can do to get "credit ready". From paying your bills on time to paying down your level of debt, these are tried and true practices that can pay big dividends.
Learn how the information in your credit report is "weighted" to help determine your credit score. By looking at your credit the way a lender does, you can take steps to improve the "credit snapshot" you present to lenders.
Your credit report changes on an on-going basis. To make sure everything is accurate and to get the credit you deserve, it is recommended that you monitor key changes to your credit report. Monitoring your credit can also be your "first line of defense" against identity theft.
Knowing the Right Questions to Ask Can Help You Make the Best Decision.
Ask yourself these questions:
How much can I afford to pay each month towards my mortgage?
Is my income stable? Is it likely to increase over the next few years?
If interest rates should rise sharply, could I afford to make the higher payments of an ARM loan?
How long do I plan on remaining in the home?
While you can't know what interest rates will be in the future, what direction is in store for the future, and will this trend continue?
The bottom line:
If your goal is to have the lowest possible payments in the early years of your loan, AND you don't plan on remaining in your home for the long term, an ARM may be an excellent loan choice with its lower initial interest rates. Should interest rates decline further, an ARM will also allow you to benefit from lower rates without having to refinance.
If you plan on staying in your home for a longer period of time (say five years), and feel that interest rates are currently favorable, but likely to climb steadily, you should strongly consider taking advantage of a fixed rate loan. This will allow you to "lock in" lower interest rates now and remove the pressure and uncertainty caused by worrying whether or not rising interest rates will cause your payments to increase substantially.
Know your options and carefully review offers from competing lenders before choosing the loan that's right for you!
