If you are considering buying a home, then you may be more than a little confused by all of the terms you hear about home loans. After all, lenders throw around words like fixed rate, balloon mortgages and adjustable rate mortgages without a thought. But if you aren’t at least familiar with the basics—those terms can be pretty confusing!
Here’s a basic guide to the three most common types of home loans. Study it, and determine which one is right for you.
Fixed Rate Home Loan
If you are thinking about buying a home and staying in it until you pay it off, then you will probably want a fixed rate home loan. With this type of loan, you will be assigned a fixed interest rate, and then that rate will not change for the life of the loan. If interest rates skyrocket, yours will remain the same. On the other hand, if they plummet, you will likely be paying a higher rate. (You can always refinance in order to get a lower rate.)
Adjustable Rate Mortgage (ARM)
The interest rate with this type of loan goes up and down with the market. In other words, if the interest rate is low, the rate on your home mortgage will be low, but if it’s high, your loan interest rate will reflect it. And because the interest rate on a home mortgage loan affects the payments, you will never know from reporting period to reporting period what your monthly mortgage payments will be. This type of loan obviously isn’t for everyone.
So, who might use an ARM? For starters, if you are purchasing a house for investment purposes and plan to sell it quickly, you might take advantage of low interest rates by getting this type of loan—particularly if it looks as if they may go lower. Another reason to use an ARM as a home loan is if you are buying a home in a time when interest rates are on the decline. You can take out an ARM, and then change it to a fixed loan once the interest rates bottom out.
Balloon Mortgage
With this type of loan, you will make monthly payments for a fixed amount of time, with a fixed interest rate. The difference is that at the end of the payment schedule, you will owe the unpaid balance in one lump sum. If you use a balloon mortgage, you will find that the interest rates are much lower than either a fixed rate mortgage or an ARM.
The obvious negative to this type of loan is that huge payment due at the end, but if you are planning to hold the house for a short period of time, then this might be the loan for you.
By understanding the various types of home loans that are available to you, you will be better prepared to make a decision that is just right for you and your family.
Saturday, October 11, 2008
Thursday, October 2, 2008
California Home Loan Information
It is not very easy to choose the right home loan from the varied number of options available in the market with different benefits and different rates. You can get help and information from any mortgage broker, bank or credit union. Nevertheless, they all work with the traditional financing and avoid offering loan to people with credit problems. But if you are residing in California, you are lucky for you get better options at “California home loan.”
California home loan offers you a wide range of home loan options. They offer you loan even with low credit scores, as low as 500. You can even get a “ no doc” home loan without representing any document like income proof and credit history. But to get “no doc” home loan you should have a decent credit rating.
Today, there is no need of going to bank to apply for a home loan. California home loans offer you online broker and credit facility. It is very simple to apply with an online broker. You have to fill a quote request and the broker will search a lender according to your quote request. Lenders will give you quotes including norm and terms of loan, closing costs, interest rate and monthly payments.
California mortgage rates change very frequently as they depend on the real estate market. You should choose a plan with low EMI otherwise it might prove heavy on your pocket.
California mortgage rates depend upon the given factors:
1. The mortgage loan.
2. The mortgage amount.
3. Recent market value of the property.
4. Type of real estate you are going to offer as security.
5. Recent market value of property to be mortgaged.
6. Penalty for late payment.
7. FICO score.
So it is better to consult a financial adviser before applying for a home loan to avoid any hassle. Anyway, do not postpone it. Not having a home loan is the most common financial mistake.
California home loan offers you a wide range of home loan options. They offer you loan even with low credit scores, as low as 500. You can even get a “ no doc” home loan without representing any document like income proof and credit history. But to get “no doc” home loan you should have a decent credit rating.
Today, there is no need of going to bank to apply for a home loan. California home loans offer you online broker and credit facility. It is very simple to apply with an online broker. You have to fill a quote request and the broker will search a lender according to your quote request. Lenders will give you quotes including norm and terms of loan, closing costs, interest rate and monthly payments.
California mortgage rates change very frequently as they depend on the real estate market. You should choose a plan with low EMI otherwise it might prove heavy on your pocket.
California mortgage rates depend upon the given factors:
1. The mortgage loan.
2. The mortgage amount.
3. Recent market value of the property.
4. Type of real estate you are going to offer as security.
5. Recent market value of property to be mortgaged.
6. Penalty for late payment.
7. FICO score.
So it is better to consult a financial adviser before applying for a home loan to avoid any hassle. Anyway, do not postpone it. Not having a home loan is the most common financial mistake.
Important Information On Home Loan Refinance
Deciding on a home loan refinance is a major decision. If done right, refinancing can ultimately help you manage your finances well.
Deciding on a home loan refinance may be your best financial decision if done at the right time and with the right circumstances. Simply put, home refinancing is the process of changing your home mortgage to another which suits your needs better. It means that you have to take out on a new loan, and use it to pay your existing home loan.
Home loan refinance is a very promising financial move, but it can only reap about best results when carefully thought of. Through refinancing, you may be able to lock in with a lower, steadier interest rate without having to worry about balloon payments. However in some unfortunate cases, refinancing may cost more than it will save. It is then a decision that should never be taken for granted.
Reasons Why People Refinance
There are many reasons why people choose to refinance their home loans. You may want to get some funds to renovate your home, pay off all your others debts in a quick way, or raise some cash for a major purchase or for a vacation. In a more practical sense, most people opt for a home loan refinance in order to get a cheaper rate to pay. A few also resort to refinancing in order to switched from a fixed rate mortgage terms to a more variable rate, or from a variable to a fixed rate, for one reason or another.
If you are caught in either of the situations given above, you can go for a home loan refinance. Bear in mind that it is best to start with a clear and specific set of goals. Whether you want to cut down on your repayments, improve your home or free up some cash, it is important that you have a target objective. This will make the entire refinancing process smooth and trouble-free.
The process of getting a home loan refinance will usually take some time, effort and money. You should first find out what the approximate fees and charges are for refinancing. Most likely, your lender will charge you for your application fees starting with loan refinancing down to credit checking. On top of this, lenders may also charge you for title search and insurance to cover the cost of property research and policy. Also, loan origination fees may be imposed by your lender as they prepare you a new set of mortgage terms and arrangement. To get the best deal out of your home loan refinance, shop around for good offers provided to you. It is most advisable to do some comparison shopping in terms of services to get the best deal out of your refinancing cost.
The rule of thumb in refinancing states that a home loan refinance will only make sense if your interest rate gets lowered by at least 2 percent. However, know that mortgage terms are not created equal. Before deciding to refinance, make sure that you carefully consider all the aspects of the new mortgage and make sure that you will get a better deal than your previous one.
Deciding on a home loan refinance may be your best financial decision if done at the right time and with the right circumstances. Simply put, home refinancing is the process of changing your home mortgage to another which suits your needs better. It means that you have to take out on a new loan, and use it to pay your existing home loan.
Home loan refinance is a very promising financial move, but it can only reap about best results when carefully thought of. Through refinancing, you may be able to lock in with a lower, steadier interest rate without having to worry about balloon payments. However in some unfortunate cases, refinancing may cost more than it will save. It is then a decision that should never be taken for granted.
Reasons Why People Refinance
There are many reasons why people choose to refinance their home loans. You may want to get some funds to renovate your home, pay off all your others debts in a quick way, or raise some cash for a major purchase or for a vacation. In a more practical sense, most people opt for a home loan refinance in order to get a cheaper rate to pay. A few also resort to refinancing in order to switched from a fixed rate mortgage terms to a more variable rate, or from a variable to a fixed rate, for one reason or another.
If you are caught in either of the situations given above, you can go for a home loan refinance. Bear in mind that it is best to start with a clear and specific set of goals. Whether you want to cut down on your repayments, improve your home or free up some cash, it is important that you have a target objective. This will make the entire refinancing process smooth and trouble-free.
The process of getting a home loan refinance will usually take some time, effort and money. You should first find out what the approximate fees and charges are for refinancing. Most likely, your lender will charge you for your application fees starting with loan refinancing down to credit checking. On top of this, lenders may also charge you for title search and insurance to cover the cost of property research and policy. Also, loan origination fees may be imposed by your lender as they prepare you a new set of mortgage terms and arrangement. To get the best deal out of your home loan refinance, shop around for good offers provided to you. It is most advisable to do some comparison shopping in terms of services to get the best deal out of your refinancing cost.
The rule of thumb in refinancing states that a home loan refinance will only make sense if your interest rate gets lowered by at least 2 percent. However, know that mortgage terms are not created equal. Before deciding to refinance, make sure that you carefully consider all the aspects of the new mortgage and make sure that you will get a better deal than your previous one.
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