A borrowing strategy is a smart approach to securing your first mortgage or refinancing to purchase a new home.

The best loan is about more than just the lowest interest rate. It’s about finding the deal that best fits your unique circumstances. The home loan market in the U.S. is vast and well-serviced, offering a wide array of options. While this abundance is beneficial, it can make thorough research challenging.

Around 20% of home loans are now arranged through mortgage brokers, who offer access to a variety of banks and lenders. However, a large portion of borrowers still turn to major financial institutions or newer online lenders.

Here are eight key points to consider as you develop your borrowing strategy:

Lenders Differ

Not all lenders have the same risk profiles or loan products. Expect to receive varying responses and offers when you shop around.

Beware of Low Rates

The lowest interest rates often come with the least flexible loan terms. Ensure you’re not locking yourself into a deal that restricts your future options more than it saves you in interest.

Prioritize Flexibility

Mortgage flexibility is crucial as your life circumstances may change over time. Consider loans that allow for payment pauses during significant life events, such as illness or having a child. Be aware that early loan payoff may incur fees.

Fixed Rates

Fixed rates offer stability by locking in your borrowing cost. With a fixed-rate loan, your mortgage payments remain consistent, which can be beneficial when rates are low.

Variable Rates

Variable rates can provide lower payments if borrowing costs decrease. However, they also carry the risk of rising rates, which can impact your cash flow. Discuss with your mortgage broker or lender to determine the best option for your situation.

Note: The information provided here is for general guidance only. Always consult with a financial advisor or accountant to get advice tailored to your personal circumstances.