Buying a home is often the largest financial decision a person will ever make. Whether you’re a first-time buyer or re-entering the housing market, understanding the mortgage process and knowing what to look for can help you make informed decisions and raise your financial awareness.

What to Look for When Mortgage Shopping

When financing your home, you have options. Mortgage loans are available through banks, credit unions, and mortgage companies, each offering different products and terms. Some borrowers prefer working with institutions they already have relationships with, while others seek lenders that specialize in residential mortgages or those that serve their local community.

It’s important to compare multiple lenders since not all will offer the same products or costs. Some may provide government-backed loans – such as FHA, VA, or USDA loans – while others may only offer conventional mortgage products. By shopping around, you can ensure you’re getting the best mortgage for your needs.

If you have concerns about whether a lender is legitimately conducting business in Nebraska, you can verify them by visiting the Nationwide Multistate Licensing System’s consumer access page, or by calling the Nebraska Department of Banking and Finance at (402) 471-2171.

Key Considerations

Before committing to a mortgage lender, create a checklist of factors that matter to you, both financially and personally. Key considerations should include the following:

1. Interest Rates

Interest rates vary based on Federal Reserve policies, your creditworthiness, income, debt levels, and the type of loan you choose. Mortgages generally come with either a:

• Fixed interest rate, which stays the same for the life of the loan, providing predictable monthly payments; or a

• Variable interest rate (an adjustable-rate mortgage or ARM), which may start lower than a fixed rate but can increase over time. If you choose an ARM, be sure to budget for potential payment increases.

2. Loan Terms

Most mortgages are 30-year loans, but shorter options, such as 15-year and 10-year loans, are available. While shorter-term loans require higher monthly payments, they allow you to pay off the mortgage faster while paying less interest.

3. Down Payment Requirements

The amount you need for a down payment depends on the type of mortgage. Some loans, like VA or USDA loans, require little to no down payment, while conventional loans may require 5% to 20% or more. Take note: A higher down payment can reduce your monthly mortgage costs and eliminate the need for private mortgage insurance (PMI).

4. Closing Costs

In addition to the down payment, buyers must pay closing costs, which include fees for loan origination, appraisals, credit reports, and agent commissions. Some lenders may offer programs to reduce or waive these costs, so it’s worth asking about potential discounts.

5. Monthly Budget and Affordability

Before committing to a mortgage, be sure your monthly payment aligns with your budget. Many lenders recommend that you not devote more than 28% of your gross yearly income toward a mortgage. Consider additional costs such as property taxes, homeowners insurance, HOA fees, and maintenance. A mortgage should be a sustainable financial commitment that supports long-term stability.

Final Thoughts

Buying a home and securing a mortgage are significant financial decisions that require careful planning. Take the time to research your options, compare lenders, and choose a mortgage product that best suits your financial goals — both now and in the future. With the right approach, homeownership can be a rewarding and financially sound investment.