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Demystifying The Home Mortgage Loan
With the changes in lending laws, finding the right home mortgage loan is very important. And for homeowners that want to take advantage of the current mortgage rates, or would like to refinance their mortgage for a shorter period to pay it off more quickly, finding the perfect lender and correct rate is essential.
Buying a home requires a very extensive credit check and, for this reason, there are many aspiring homeowners that cannot get a loan. The most common reasons for denial are low credit score, high debt load, or purchasing a house that is too expensive. Professionals in commission jobs have a harder time proving a consistent income, so be prepared to show at least a year's worth of commissions or bonuses to prove the ability to pay the mortgage.
Mortgage rates are also a hurdle for most buyers. There are five basic mortgage types: adjustable rate (ARM); fixed rate; VA; interest only; or 80/20. Each features different benefits, and it is important to evaluate and understand the impact.
The ARM loan features lower interest rates at the beginning of the loan and is designed for buyers that plan to keep the home a short time and want a lower payment. The fixed rate mortgage features the same interest rate for the length of the loan and is designed for buyers that crave a stable interest rate. The VA is available for veterans and other buyers that qualify for the program. An interest only mortgage is designed for buyers that don't intend to build equity in the property and will sell quickly. The interest rate is very low, but has an adjustable rate. An 80/20 loan is a method for buyers without a down payment to avoid PMI by essentially getting two loans.
Mortgage refinancing sounds a lot more simple than it is, but there are cases where it makes complete sense. The steps to refinancing a mortgage are virtually the same as the getting the first loan. It just takes a shorter amount of time depending on how long it takes to get the appraisal and if the bank likes the number the appraiser provides. Some of the reasons to refinance are if the market rates are lower than the rate on the existing loan; to lower the number of years on the loan to pay it off sooner; if the home equity will provide needed cash; or to convert an ARM to a fixed-rate loan or vice versa.
It's not an easy process to purchase a mortgage for a home, so be sure to research thoroughly and have an idea about expenses and credit scores. It makes it so much easier that way!
Buying a home requires a very extensive credit check and, for this reason, there are many aspiring homeowners that cannot get a loan. The most common reasons for denial are low credit score, high debt load, or purchasing a house that is too expensive. Professionals in commission jobs have a harder time proving a consistent income, so be prepared to show at least a year's worth of commissions or bonuses to prove the ability to pay the mortgage.
Mortgage rates are also a hurdle for most buyers. There are five basic mortgage types: adjustable rate (ARM); fixed rate; VA; interest only; or 80/20. Each features different benefits, and it is important to evaluate and understand the impact.
The ARM loan features lower interest rates at the beginning of the loan and is designed for buyers that plan to keep the home a short time and want a lower payment. The fixed rate mortgage features the same interest rate for the length of the loan and is designed for buyers that crave a stable interest rate. The VA is available for veterans and other buyers that qualify for the program. An interest only mortgage is designed for buyers that don't intend to build equity in the property and will sell quickly. The interest rate is very low, but has an adjustable rate. An 80/20 loan is a method for buyers without a down payment to avoid PMI by essentially getting two loans.
Mortgage refinancing sounds a lot more simple than it is, but there are cases where it makes complete sense. The steps to refinancing a mortgage are virtually the same as the getting the first loan. It just takes a shorter amount of time depending on how long it takes to get the appraisal and if the bank likes the number the appraiser provides. Some of the reasons to refinance are if the market rates are lower than the rate on the existing loan; to lower the number of years on the loan to pay it off sooner; if the home equity will provide needed cash; or to convert an ARM to a fixed-rate loan or vice versa.
It's not an easy process to purchase a mortgage for a home, so be sure to research thoroughly and have an idea about expenses and credit scores. It makes it so much easier that way!
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