How to Choose the Right Loan – the Ins and Outs

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If you are looking for a mortgage, a home equity loan, an auto loan, or a personal loan, you want to feel like you are getting the best loan available. Keep these items in mind while you are shopping for a loan:

Understanding APR & Loan Terms

When comparing loans you want to pay close attention the annual percentage rate (APR). This is your interest rate for a whole year, not a monthly fee. The lower the APR, the more you can save in the long run.

You’ll also want to consider the term, or length, of the loan because it can have a significant impact on your monthly payments, as well as the total cost of the loan once you’ve made all your payments.

Both of these factors can affect how much money you could save, or pay. For example, if you have a five-year loan with a high APR, you could end up making larger interest payments than for a loan with a shorter term and lower APR.

Repayment Policy

Depending on the payment options of your loan, making payments early could result in penalty fees. If you think you will want to pay off your loan before the term is up, you will want to either select a loan with flexible payment options or, at the very least, be aware of the fact that you’ll be charged a fee if you try to pay it off early. We Florida Financial loans do not have any prepayment penalties.

Members who opt for a 5/1 adjustable rate mortgage receive a closing cost credit of 2% of their loan amount. Through March 31, 2018, the credit union will waive closing costs for home equity loans. See additional details below regarding early payment on these loans.

Hidden Fees

Some loans have fees. It’s important to know this before starting the loan process, or else your loan could cost you more that you expected. Based upon the type of loan you’re getting, you might pay a loan application fee, an origination fee, or a disbursement fee. While there is often no way to get around many of these fees, it is important that you are aware of them and how much they will cost you in the long run.

The important thing to remember when applying for a loan is to make sure you understand the terms of your loan. Read all of the documentation provided to you that relates to your loan. If there is something you don’t understand, just ask. As a member of We Florida Financial, you have tools at your disposal to ensure that you are getting the best loan to meet your needs. Whether it’s taking advantage of our Financial Fitness program or just talking with a lender one-on-one, you can be sure that we are looking out for you.

For more detailed, loan-specific information be sure to read our other blogs, such as details on our First Time Home Buyer Program and tips on applying for a car loan.

Sources:


5/1 Adjustable Rate Mortgage

Borrower is responsible for all closing costs exceeding 2% of their loan amount. No cash back to borrower if the 2% credit exceeds the actual closing costs. We Florida Financial will require reimbursement of the closing cost credit if the loan is paid off within the first 24 months from the first payment due date. Estimate of customary fees imposed for the opening of the loan (by We Florida Financial or a 3rd party such as an appraiser) range from a minimum of $3,640 (for a $40,000 loan) to $10,232 (for a $417,000 loan).

Home Equity Loan

Estimate of customary fees imposed/charged by the Credit Union or third parties is up to $1,300; We Florida Financial pays these costs, except for the $295 origination fee, provided the loan is not paid off within 24 months.