Victor Ramos & Allen Perry
There are many different ways to finance your home and in today’s economy it is key that you find the best mortgage that will fit you. First you must asses what type of loan you are looking for or if you qualify for government aid when financing your home. You must take in consideration the time duration that you plan on living in your home or if it is just a business investment.
When getting financed for a mortgage loan it is advised that you make a checklist to make sure you are well prepared for this big investment. According to http://finance.yahoo.com/ the key basics that you need to make sure that you have covered is first to review your credit. It is important that you review your credit to see if there are any errors. If errors are found it is a must to take care of them before proceeding in purchasing a home. That then leads into choosing what bank or lender you will be seeking to get a loan with. It is important to take your time and research current rates of various lenders to make sure you are getting the best deal. Next you must go and see about getting yourself prequalified . The way to do this is to make sure all debts are paid off. The less debts in your name the more likely that the banks will approve your loan. The last item on the checklist by http://finance.yahoo.com/ is to check into government organizations such as the U.S. Veterans Administration to see if there are any ways of lowering your down payment on your new home. This then leads into finding the right loan for you.
The first loan that we will be discussing is an Adjustable-Rate Mortgage loan. These types of loan’s have interests rates that are adjusted based on the current financial market. You have the ability to sometimes set how long the current interest rate will be in the beginning of the loan which are usually of 1,3,5,7 or 10 years in which the interest rate is then adjusted annually from then on. You may have the option to have the first few years of the loan locked into a fixed rate and once that time period is up the Adjustable-Rates will then begin in affect.
The next type of mortgage that is typical when financing a home is a fixed mortgage. This is a more appealing loan for home buyers because your interest rate is fixed which gives the buyer an idea on what the cost of the home will be for the duration of the loan. This type of loan typically is for a 30 year mortgage in which monthly payments are made for the life of the loan which are fixed at one rate. This type of mortgage allows for the home buyer to plan financially for the future because they can estimate their total cost of the loan as to where an adjustable rate mortgage does not have such a luxury. A very similar loan like the 30 year fixed rate mortgage loan is the 15 year fixed mortgage but with slight differences. The payments for a 15 year fixed mortgage will be higher but this then allows for the buyer to have a lower interest rate because the loan will be paid back to the lender in half of the time of a typical 30 year fixed mortgage. It is good to asses if you can afford this type of loan and pay off you home sooner rather then caring out your loan for 30 years.
If as a home buyer you are able to qualify for a Federal Housing Authority loan or FHA loan, you then might want to take a good look at this type of loan because it can be very beneficial for the buyer. This type of loan typically targets new home buyers because the payments for this loan will require smaller down payments than typical loans from other lenders. The terms of these loans are usually set for 30 years and are targeted for purchases around moderately priced homes. One draw back is meeting the qualifications of this type of loan but if as a home buyer you are able to get this type of loan it could be a very appealing loan. According to http://www.fha.gov/ they have insured more than 37 million mortgages since the year 1934.Another government loan that requires qualifications by the buyer is a VA loan which stands for Veterans Affairs. This loan is through the Department of Veteran affairs and can be combined with a second mortgage. The payment for a VA loan are typically lower than your average loan and also may or may not require a deposit in order to purchase your home. These mortgages are typically for 30 years and can also be passed on to another person who meets the Veteran requirements of the loan. After taking a look at their website which is http://www.homeloans.va.gov/ , the Veterans Affairs can offer other help to veterans who are searching for a mortgage loan such as educational benefits, survivor insurance and traumatic injury insurance.
If you have the extra money there is a type of loan which allows you to pay extra money to the lender which then lowers the interest rate of the loan. This type of loan is called a Buy Down Mortgage Plan. This loan may have high initial cost but it gives the buyer the option for having lower payments during the life of the loan which is also typically 30 years for this type of loan. This may be an appealing loan because it allows for more flexibility financially for the buyer in the future than a typical loan because you would not have the burden of a large house payment as you normally would in a standard loan.
In order to finance your home you must take in consideration your main goal as a buyer. This will then allow you to pick the right mortgage loan for you. You might want to asses the current market rates and research before you commit to one type of loan over another. In times such as these where the country is economically on a low many people are looking to save more money than ever and finding the right mortgage is a good way to start. Purchasing a home is a big commitment which takes a lot of time and effort by the buyer so educating yourself in the different mortgages will give you an upper had when approaching a lender for a loan.
Sources:
Baker, Kay Wilminton NC real estate 2009 http://www.activerain.com/
California Real Estate Practice, by Kathryn Haupt & Megan Dorsey,
Published by Rockwell Publishing 4'th edition, copyright 2009
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