subject: Mortgage & Finance Help For New Home Owners [print this page] Burned by the subprime mortgage crisis, banks and lenders have made it a lot harder for home buyers to get mortgage & finance. But for the right person with a solid paper trail of financial capability, it's not so hard. As a matter of fact, banks have fully recovered from the recession, and are anxiously awaiting home buyers.
First thing to know is that a mortgage - any kind of mortgage, is going to need a hefty down payment. Also to be noted that fixed-rate loans are more in vogue than Adjustable Rate Mortgages (ARM). This is mostly because a lot of people got sucked in with unmanageable ARMs and lost their homes.
This doesn't, however, change the fact that a good Adjustable Rate Mortgage can save a lot of money in the long run. With fixed-rate mortgages, all that really needs to be worked out is the repayment period, as in the size and number of mortgage payments. For an ARM, get hold of a mortgage rate calculator on the internet, and start comparing offers. The most important thing to understand here is the difference between the interest rate and the APR, or annual percentage rate.
Either way, understand the difference between the quoted interest rate and the annual percentage rate (APR). Failing to understand this difference is what led to the flood of foreclosures and defaults in the past two years. Credit ratings are also very important these days, and it is difficult to get a loan without solid credit. There is no magic wand to fix broken credit or get a home loan without a sizeable down payment.
Please note that there are no quick-fixes for bad credit ratings. But some people have lost everything, inspite of doing all these things right. What happened was that mortgage rates went haywire and in some cases property values plummeted below even the loan balance.
Borrowers lost the home, the payments that had already been made to the lender, and on top of that ended up owing the difference to the lender. To make sure this doesn't happen again, it is of utmost importance to do a lot of research first. Find the right loan and the right lender before selecting a property.
Get pre-approval for the loan, and only then set out on a hunt for a suitable home that matches the loan limits. This leaves enough room for mortgage & finance variations, and possible refinancing. It's also a good idea to maintain a contingency fund for making mortgage payments, to offset income loss or unexpected expenses.
