Home Financing -- Finding The Best Loan For Your Situation
When it comes to buying their dream houses, people often turn to financing. But it's not easy to look for a nice home, get a loan to buy it, then spending the next several years paying off the mortgage. Don't get swayed into a false sense of security even when banks and moneylenders give you very low interest rates -- you'll still need to do your homework.
It is better to investigate around and ask about what types of credit are open in the market that may suit you. It is impossible to have a perfect loan that will work for everybody. There will always be one loan type that will work better for you than another. Decide first on what you want for a home in order to have the best type of loan you should choose.
Are you a low-income house hunter?
One can have difficulties on acquiring a loan because your salary does not pass for it. When this happens, you can resolve to a temporary buydown. Temporary buydown refers to a type of credit given to people who currently have low salary but will soon get a raise.
The two most popular kind of temporary buydowns are 3-2-1 loan and the two-to-one loan. The first type have an interest that goes up one point every year for the next three years and then remain constant for the succeeding years. The second one increases the interest rate have a one point increase for only the first two years.
These types of loans need the borrower to spend a bit more money at the early part of the loan duration. These little sacrifices are needed for you to be awarded the credit.
For those looking for temporary housing
Do you want to acquire a house but are not certain on permanently settling in a specific place? If yes, try having the delayed adjustable rate loan (Delayed Adjustable Rate Mortgage or Delayed ARM). This is suitable for people who are always moving from one place to another or those who are planning to sell the house after paying it off.
Delayed ARM requires you to pay fixed monthly fees longer than other type of buydowns. For instance you have a 5-1 delayed ARM, meaning, the interest rates will be constant for the first five years only. Change of interest rates will depend on economic conditions and you arrangement with the lender.
Are you looking for a home to spend the rest of your life in?
If you have no plans of moving or plan on staying in your home for the remainder of your life, you can go for a fixed-rate mortgage. Fixed-rate mortgages mean just that - fixed. Your interest rates and monthly payments remain the same throughout the life of the loan. If you can get a low interest, so much better because your payments don't increase even if market rates do.
Fixed-rate mortgages come in 30 or 15 years. Both will have you pay the same amount, but the longer one will charge you a lesser monthly fee.
It is better to investigate around and ask about what types of credit are open in the market that may suit you. It is impossible to have a perfect loan that will work for everybody. There will always be one loan type that will work better for you than another. Decide first on what you want for a home in order to have the best type of loan you should choose.
Are you a low-income house hunter?
One can have difficulties on acquiring a loan because your salary does not pass for it. When this happens, you can resolve to a temporary buydown. Temporary buydown refers to a type of credit given to people who currently have low salary but will soon get a raise.
The two most popular kind of temporary buydowns are 3-2-1 loan and the two-to-one loan. The first type have an interest that goes up one point every year for the next three years and then remain constant for the succeeding years. The second one increases the interest rate have a one point increase for only the first two years.
These types of loans need the borrower to spend a bit more money at the early part of the loan duration. These little sacrifices are needed for you to be awarded the credit.
For those looking for temporary housing
Do you want to acquire a house but are not certain on permanently settling in a specific place? If yes, try having the delayed adjustable rate loan (Delayed Adjustable Rate Mortgage or Delayed ARM). This is suitable for people who are always moving from one place to another or those who are planning to sell the house after paying it off.
Delayed ARM requires you to pay fixed monthly fees longer than other type of buydowns. For instance you have a 5-1 delayed ARM, meaning, the interest rates will be constant for the first five years only. Change of interest rates will depend on economic conditions and you arrangement with the lender.
Are you looking for a home to spend the rest of your life in?
If you have no plans of moving or plan on staying in your home for the remainder of your life, you can go for a fixed-rate mortgage. Fixed-rate mortgages mean just that - fixed. Your interest rates and monthly payments remain the same throughout the life of the loan. If you can get a low interest, so much better because your payments don't increase even if market rates do.
Fixed-rate mortgages come in 30 or 15 years. Both will have you pay the same amount, but the longer one will charge you a lesser monthly fee.
About the Author:
If you have ever taken out any PPI it may have been mis-sold and you could be entitled to claim it back. Real Claims specialises in PPI claims and can help you claim your money back. Alternatively if you face financial troubles Wilson Field offer free Debt Advice.