Little Known Home Mortgage Facts

There are many ideas and concepts that the average person does not know about a home mortgage

, mortgage rates and about a mortgage refinance period. Most people learn throughout the home buying process, and make mistakes that they would have avoided had they been told or warned before closing the deal. When dealing with mortgages, it is important to research all options, however lenders do not always offer key pieces of information. Here are some tips to help the average home buyer with their home mortgage process:

First of all, the zero down payment option is real. Yes it does happen. Unfortunately this is not available to everyone, however homebuyers who are purchasing their first home as well as people with a limited income may benefit from this offer. In addition to the zero percent down option, there are government agencies which will pay closing costs for individuals or families with limited income. Mortgage rates may be higher due to the absence of a down payment; however with a mortgage calculator it is still possible to obtain financing or a mortgage refinance for a home.

Secondly, consider an adjustable rate mortgage or ARM. Adjustable rate mortgages have acquired a poor reputation because they are associated with interest rates which fluctuate each year. Most people are not aware that ARM loans come in many varieties, for examples a 5-1 ARM is will be fixed for the first five years and will then reset each year after that. The majority of borrowers are not aware that the interest rates cannot simply go through the roof because they have a cap on how high they can go. This makes an ARM loan a great choice for a lot of people because the rate can't go all that high and you can often start out with a much lower interest rate for the first one to five years.

Finally, for those whose home mortgage currently has an interest rate of 7.5% or higher and have noticed that current interest rates are less than 6.5% it may actually save the home owner more than $100 a month if the home owner decides to refinance at the lower cost. Unfortunately there are still closing to pay when refinancing, therefore it is important to research and use a mortgage calculator to determine whether doing so will have long term benefits. For people who are going to live in the house for at least two or three years, the long term benefits may in fact be substantial. Many home owners do not realize that one small interest point can make a significant financial difference over the course of a year, and even more so over the course of a 30-year home mortgage.

Overall, there are many concepts and ideas which are not thoroughly explained to the borrower before or at the end of closing. To ensure that all aspects of the home mortgage have been considered, it is recommended that new borrowers hire a mortgage broker to help with the loan process.

by: Malcolm Nguyen

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