What’s In A Home Loan?

In considering the purchase of a new home, there are several loans in which to educate yourself on. Rates will continue to rise and fall with the market, but most home loan types will remain standard per state. A loan officer at a bank or a mortgage broker can also assist you with finding the home loan that is right for you. But what is the difference between some of the key home loans available?

Below are some of the various types of home loans available for future homeowners. Some are dependent on finances, credit, home type, location, etc.

FHA Insured Loans:
The FHA (Federal Housing Administration) insured loan is an insurance backed home loan provided by a lender that the FHA must approve. This particular type of loan was derived in nineteen hundred and thirty-four, to make sure that the mortgages handed out were safely insured in case of economic turn like that of the Great Depression.

FHA loans normally require a much lower down payment, which allows for those with less money up-front to still have the ability to purchase a house. The FHA loans are also often easier to qualify for than your standard conventional loans.

Conventional Loans:
A conventional loan is not insured or secured by the United States Federal Government. It is a private loan that often requires mortgage insurance. There is a fixed principal, with an interest rate and monthly payments. Most conventional loans are thirty-year, and are actually one of the most common types of home loans available to buyers.

VA Loans:
A VA (Veterans Affairs) loan is issued by a qualified lender and guaranteed by the United States Department of Veterans Affairs. Created for American Veterans or their surviving, unmarried spouses, this loan assists these individuals that cannot get private financing. There are specific areas in which these loans are available, although when one qualifies, mortgage insurance is not required on over one hundred percent of the borrowed amount.

Balloon Loans:
A balloon loan is more of a short-term way in which to finance a the purchase of a house. A large sum is paid at the end of three, five or seven years. Smaller amounts are paid at first, in monthly increments. Then, the sum balance is paid at maturity of the loan. A balloon may have a floating or fixed rate.

Buydown Mortgages:
This type of loan allows a borrower to purchase more of a house for less money up front. This is because the interest rate starts at a lesser value initially, then increase within the first one to three years to meet your fixed rate. A lump sum is usually required for the buydown, but in return, the payment are much less to begin with.

No matter which loan you decide is right for you, it is always good to be informed of what your options may be. Whether purchasing Nacogdoches real estate or land in Florida, find an informative lender, broker or bank to help you make an informed decision. Don’t hesitate to look into several options upon deciding on one for your new home purchase.

Applying For A Home Loan – What Do You Need

The Basic Needs When Applying For A Home Loan
Congratulations! Now that you have found the perfect home, all that’s left is getting the perfect mortgage. In order to do that, you will have to know what your lender needs from you in order to get your loan application approved.

Property Description
When applying for a home loan, you will need to provide the lender with detailed information regarding the property that you intend to purchase, including a physical address, what type of loan you are requesting and how you obtained the funds to be used as a deposit.

Your Personal Information
All persons named on a home loan must be able to provide requested personal information including but not limited to names, dates of birth, current address, former address (typically if within the last two years), marital status, current and former employment information, telephone numbers and any dependants you may be responsible for.

Most lenders require tax returns for at least the two years preceding the loan application, along with current payslips or, if self-employed, a year-to-date profit/loss statement. This may be required for more than the previous years income.

Current Mortgage Expenses
An important part of every home loan application is affordability. Your lender will need to know the percentage of your income that will be available to pay for a new home. If you have a current mortgage, be ready to provide a detailed list of expenses that you pay each month in relation to the property. This includes a mortgage payment, body corporate fees, local government taxes (rates), mortgage insurance, homeowner’s association fees, utilities, etc. If you plan to sell the home, advise your lender know so that they are aware you are simply replacing one debt with another.

Legal Yes Or No’s
Almost every loan application asks both the borrower and co-borrower (if applicable) to answer a few simple yes and no questions on the application. Questions pertaining to outstanding judgments, bankruptcy filings, foreclosures, lawsuits, alimony, child support and citizenship status are standard and should be expected when applying for a home loan.

Statement Of Assets & Liabilities
When applying for a home loan, both the borrower and co-borrower will be required to disclose all of their current assets and liabilities. An asset is property, either real or personal, that is owned and is of value. A liability, on the other hand, is a financial obligation for which one is liable. A loan application will request information relating to assets and their current market value, including automobiles, real estate, stocks, bonds, life insurance (cash value), business net worth, personal property, etc. If any amount of money is owed on these properties, the lender will request information relating to the unpaid balance in order to determine.

Disclaimer: Information provided in this article is intended to be general in nature only. This does not constitute specific financial advice to individuals, groups, business or corporations.

Don’t Get Trapped With Low Home Loan Rates

If you are planning to buy a new home, you have to know about home loan rates. You are going to pay for it in a very long time so you have to make sure that you get a home loan rate that will best fit your budget.

There are a few companies who offer low home loan rates. For sure you will be tempted to grab the offer right away failing to get into the finer details that makes up the deal. Before making an instant decision that could possibly trap you into paying more than what you bargained for, here is some useful information that you could use to make sure that you can truly afford the house you are buying for:

The first step to determine if you can afford to have a new home is not by knowing whether or not home loan rates are at their lowest points. Consider first your income and liabilities. Compute for your monthly income and determine how much your total liabilities for a month are. Always include in the computation your total monthly spending that do not always reflect on writing or billing statements such as your budget for pool cleaning, gardening services, even your babysitter’s payments. If you have more than enough left both for savings and for your emergency fund, then you must be ready for a bigger project like purchasing a new house.

It is also important to determine your debt to income ratio or DTI ratio in order to know whether you have the capability to apply for a home loan. Even if you get to avail of a low home loan rate, you must be comfortable of how much you are going to pay for it every month. DTI ratio computation will give you an idea how much you should budget on your monthly housing payment, monthly liabilities, and savings.

Do a thorough search for the best home loan rate there is. Do not get satisfied with only one offer as there are many other lenders that you can go to. Try searching online for faster results. When you do find the rate that you are most comfortable to be paid for, proceed to make an appointment with the lender to know more about its details. Do not forget to read the fine print of the deal as it generally contains the most important information that should not be missed.

When shopping for a new home, having the best rate in your hands is not always the key to getting your dream home. Home loans are offered not solely for the purpose of helping people get the house that they like. They are there because they are someone else’s business. If you are just going to grab an offer right away just because of the low rate that it got then you are not ready to take on this responsibility. Considering your capabilities to pay for it should be your top priority. You have to know whether you can pay for the loan or risk losing the house because of an unpaid mortgage.