The Basic Facts For Mortgage Loans
Most people, at some point in their lives, decide to buy a home. In many cases, it makes financial sense to buy a home instead of renting one. Buying a home is very costly so most people need to borrow money to be able to purchase a home. There are a few different options when choosing a mortgage loan so it will be helpful to educate yourself before you make the choice.
Fixed rate mortgages have been around the longest and are still one of the most frequently used loans. If you decide on a fixed rate mortgage, you will have to choose the term of the loan. Most people have a thirty year term, but options for ten, fifteen and even forty year terms are also available in some cases these days. Obviously, a ten year mortgage would be the least expensive loan since the interest rates are usually lower and the amount of time you are paying interest is shorter.
Over the past five to ten years, an adjustable rate mortgage, or ARM, has become increasingly more popular. As the name suggests, adjustable rate mortgages have interest rates that adjust as the market changes. A few years back, when the real estate market was booming and you could get really low interest rates, people signed up for these mortgages. Many of them are facing financial troubles as now the market has shifted and the interest rates have soared increasing their monthly payments.
This can be difficult to manage if you don't plan for it. If your monthly income is fixed, but your mortgage isn't, you could end up not being able to make the payment and eventually lose your home. A lot of people think that if they ever hit a point where they can't afford their home they will just sell it. This is a misconception though because you can only sell your home if there is someone willing to buy it.
Due to the changes in the real estate market, it is a lot more difficult to get a mortgage loan today than it was five years ago. Banks are looking at every borrower as a potential high risk. In order to even be considered as a borrower, you will need to have excellent credit and a down payment. You may need at least ten percent of the cost of the home to put down in order to qualify for a loan.
Mortgage loans are very helpful for those of us who hope to own a home someday. When it's your turn to make the purchase, be sure to choose the type of mortgage that is smartest for you.
Fixed rate mortgages have been around the longest and are still one of the most frequently used loans. If you decide on a fixed rate mortgage, you will have to choose the term of the loan. Most people have a thirty year term, but options for ten, fifteen and even forty year terms are also available in some cases these days. Obviously, a ten year mortgage would be the least expensive loan since the interest rates are usually lower and the amount of time you are paying interest is shorter.
Over the past five to ten years, an adjustable rate mortgage, or ARM, has become increasingly more popular. As the name suggests, adjustable rate mortgages have interest rates that adjust as the market changes. A few years back, when the real estate market was booming and you could get really low interest rates, people signed up for these mortgages. Many of them are facing financial troubles as now the market has shifted and the interest rates have soared increasing their monthly payments.
This can be difficult to manage if you don't plan for it. If your monthly income is fixed, but your mortgage isn't, you could end up not being able to make the payment and eventually lose your home. A lot of people think that if they ever hit a point where they can't afford their home they will just sell it. This is a misconception though because you can only sell your home if there is someone willing to buy it.
Due to the changes in the real estate market, it is a lot more difficult to get a mortgage loan today than it was five years ago. Banks are looking at every borrower as a potential high risk. In order to even be considered as a borrower, you will need to have excellent credit and a down payment. You may need at least ten percent of the cost of the home to put down in order to qualify for a loan.
Mortgage loans are very helpful for those of us who hope to own a home someday. When it's your turn to make the purchase, be sure to choose the type of mortgage that is smartest for you.
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Trinity helps to get mortgage loans bad credit and other types of loans online and offline.
posted by Credit Counseling at
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