Choosing the Right Home Loan

Choosing the right home loans is something that many people struggle with. Many people struggle with this decision before hand and others struggle with it after they already have a mortgage and they realize that they went with the wrong type of loan program. It can be overwhelming when you are applying for a loan to digest all of the information and know that you have to determine which loan is best for you. However, if you take your time and you work with the right professionals you will find that it doesn’t have to be as difficult as you might have thought it would be.

Choosing Home Loans

Choosing home loans can be difficult if you don’t understand the types of loans that are out there to be had. The first thing that you need to do when you are searching for a loan is find a mortgage broker that you can trust. You can find a broker through your realtor or through friends or family members that have recently purchased a home and had a good experience. When you work with a professional you know that you have someone on your side that can educate you about all of your opportunities and then help make them happen.

The first thing that you need to do is do some research about loans. The first thing that you will want to consider is whether or not you want a fixed rate or adjustable rate or ARM loan. A fixed rate loan is one that has the same interest rate for the entire term of the loan, which means that you have the same payment for the duration of the loan. An adjustable rate mortgage, or ARM loan, is one that has a rate that adjusts periodically throughout the term of the loan. If you plan to live in the home for more than five years you will probably want to consider fixed rate home loans but if you will be in the home for less than five years an ARM loan may be the most affordable option for you.

Next, you will need to think about home loans in terms of down payments. If you do not have much money for a down payment you will want to look into something like an FHA loan that will allow you to get into your home for almost nothing. If you would like to make loans more affordable you might then want to consider having a down payment of up to 20 percent, which will substantially lower your monthly payment.

There are a lot of different options for you to choose from so you need to consider things like interest rates and down payments. These things will affect the overall affordability of the loan so it is something to consider carefully. When you decide what sort of loan you would like, you then need to shop around with different lenders to see where you can get the best deal. You might be surprised to learn how much loan offers vary from lender to lender-because they do! Shop around when you find the right sort of loan for you to see which lender will give you the best deal, as shopping around will continue to help you save for as long as 40 years.

New Home Buyers – What You Need To Know About Buying A New Home – Part 2

In this section I am going to discuss what questions should be asked and what factors need to be considered when a new home buyer has located a property, and would like to begin the process to claim ownership of the property.

Purchase contract features

  • If you need to obtain financing, it is important to make the purchase contingent upon receiving suitable financing. This insures return of the earnest money deposit to the buyer, in the event that the buyer cannot obtain financing in the time frame specified.
  • You can include a built in counteroffer clause. If you are anticipate that you may not be the only party submitting an offer on the property, adding a clause with wording similar to, “In the event that seller receives multiple offers, the buyer agrees to pay X amount of dollars over highest offered price, up to a max price of Y.” You should discuss the pro’s and cons of this clause with your agent because there are downsides to including it. One downside to including this clause in the residential purchase contract is that the seller may perceive you as being overzealous in your desire to purchase the home and that may lead to a higher counteroffer asking price.

Obtaining Financing

I would refer you to my articles descibing the various pros and cons to different loans such as (ARMS, Fixed Rates, Option ARM’s, etc). Included are some of the questions a borrower should ask when comparison shopping for a loan.

  • Get your credit score as high as possible, your interest rate and likelihood of being qualified increase significantly with a higher credit score. If possible, payoff as much debt as possible, such as those 200 balances on that department store card you signed up for to get the advertised discount. Do this as early in the process as possible, it takes a while for these changes to your debt ratio to be reflected in your credit report.
  • Get preapproved by a lender or mortgage broker. This makes you essentially a cash buyer with a lender agreeing to approve you for a loan, barring any unexpected changes to your financial situation situation. Its also a good way to find out how much you can afford before you waste time and energy looking at homes out of your price range. A good preapproval letter will contain the following information: amount of loan, interest rate, contact information for mortgage broker or loan officer, and date letter was issued (typically letters are deemed reliable for 30 days max).
  • Find a lender or mortgage broker. A good loan officer will provide all the information that you (the borrower) need to make an informed decision about which loan to choose. And will also assist you with doing everything in the power to troubleshoot potential obstacles that occur during the processing of the transaction. Also, many lenders offer information that helps buyers to compare loan types.

I hope that this article has been helpful for you. Kevin Fenderson works as a Realtor for Hilltop Realty based in Santa Ana, Ca. He writes regularly for []. If you have any questions or comments please visit his website.

The Benefits of an Adjustable Rate Home Loans

Adjustable rate home loans are often given a bad name because a lot of people have ended up in trouble with them. The fact of the matter is that there is a demographic out there that these loans are perfect for, you just need to know if you are part of that demographic or not. If you read about these loans a bit you will find that there is a lot of negative information out there to be found on this topic, but there are some benefits to this type of loan as well.

The Benefits:

One of the benefits of adjustable rate home loans is that if you have credit challenges this is a way to get your foot into the door to buying a home. Many times if you have had credit problems in the past it is impossible to get approved for a fixed rate but you can get an adjustable rate loan. This may not be your first choice, but the benefit is that it allows for you to establish some positive credit history, especially where home ownership is concerned. When you have paid on the mortgage for three or four years and your mortgage is in good standing you can then choose to refinance and take on a fixed rate loan. Many times just having this three or four years of good payment history on an ARM loan will allow you to move onto the fixed rate loans so you don’t have to deal with any of the drama of increasing rates.

There are those people who should look at adjustable rate home loans even if they can get approved for a fixed rate loan. Who should apply for these loans on purpose? That is simple; the people who should apply for these loans are those that plan to stay in the home for less than five years. Generally your interest rate will stay about the same for the first five years of your loan and during this time you can take advantage of low interest rates and therefore low monthly payments. When you are only going to stay in the home for a couple years you do not necessarily care about building equity and paying off the principal instead of just interest and so this type of loan can be a great option for you.

The biggest benefit of these home loans are the low interest rates in the beginning. These introductory rates are often referred to as teaser rates and they are what get people to look at the loans and consider them over all of the other options out there. The awesome thing about these rates is that they will often stay the same for as long as five years, which will give you an opportunity to either refinance when the time goes for the rate increase, sell the home, or budget for a monthly payment increase.

Before you assume that these loans are not for you, you should stop and consider your situation and where you plan to be in five years. Many times this is a great opportunity for you to get into a home and have very affordable monthly payments. Before you decide that this is or is not an option for you, you should consider the opportunity and learn as much as you can about it. You may be surprised to find that you are the type of person that this loan was created for!