Mortgage Home Loans – The Way to Your Dream Home

Majority of Americans cannot own a house without mortgage home loans. Well, another option is to inherit a house. We, as a community purchase everything on loans.

Lenders change their attitude toward borrowers according to different factors. If the economy is going up, lenders are after the borrowers. When the economy goes down, borrowers find it increasingly difficult to secure a home loan. However, you can find a home loan irrespective of the economic conditions.

Different Types Of Home Loans

You can get home loans to buy a house and property. You can also use equity on your home to get secured loans. The types of loans available are home equity loan and line of credit.

Both are almost the same. However, in the latter case, you have the choice of paying interest only. In case of home equity loan, you need to make a fixed monthly payment.

Fixed Rate And Variable Rate Loans

Fixed rate loans have a fixed interest rate throughout the loan period. Variable rate loans can change interest rates. The rate can go up or down. When the interest rate lowers, you can repay more of you debt. If the interest rate goes up, it becomes difficult for the borrower.

Amortization And Negative Amortization

Negative amortization as a loan option was not available to American homebuyers two decades back. The principal amount or total loan amount increases every month. This happens because the amount paid in the month is less than the interest for that month. The remaining interest adds to the principal. Thus, your loan amount increases every month. However, such arrangements are available only for periods of up to two years. You will then make bigger payments for amortization.

Amortization is the gradual paying off of your loan. You make regular monthly payments. You pay off all the interest for that particular month. You will also pay some principal. This way, the principal amount reduces every month.

Just as you can imagine, negative amortization is not advisable. However, people are attracted to such arrangements because of low initial payments.

How Can You Qualify For A Home Loan?

You can get up to 80% of the home value as loan. Almost anyone who can make a 20% down payment can get mortgage home loans. You also need to prove that you have the income to repay the loan amount.

The interest rates vary depending on your credit score. If you have bad credit score, the interest rates will be higher. There are lenders who specialize in bad credit loans. This is because of the higher interest they can charge.

A home purchase is one of the biggest financial decisions you make in your life. A good knowledge of the kind of mortgage products available to you will help you make good buying decisions. Make the mortgage home loans work for you – never the other way round.