Home Mortgage Loan Information - Which Type of Home Loan is Best For You?

Written by Carrie Reeder


If you are considering buying a home, then you may be more than a little confused by all ofrepparttar terms you hear about home loans. After all, lenders throw around words like fixed rate, balloon mortgages and adjustable rate mortgages without a thought. But if you aren’t at least familiar withrepparttar 146239 basics—those terms can be pretty confusing!

Here’s a basic guide torepparttar 146240 three most common types of home loans. Study it, and determine which one is right for you.

Fixed Rate Home Loan

If you are thinking about buying a home and staying in it until you pay it off, then you will probably want a fixed rate home loan. With this type of loan, you will be assigned a fixed interest rate, and then that rate will not change forrepparttar 146241 life ofrepparttar 146242 loan. If interest rates skyrocket, yours will remainrepparttar 146243 same. Onrepparttar 146244 other hand, if they plummet, you will likely be paying a higher rate. (You can always refinance in order to get a lower rate.)

Adjustable Rate Mortgage (ARM)

The interest rate with this type of loan goes up and down withrepparttar 146245 market. In other words, ifrepparttar 146246 interest rate is low,repparttar 146247 rate on your home mortgage will be low, but if it’s high, your loan interest rate will reflect it. And becauserepparttar 146248 interest rate on a home mortgage loan affectsrepparttar 146249 payments, you will never know from reporting period to reporting period what your monthly mortgage payments will be. This type of loan obviously isn’t for everyone.

Buying a House? How Much Home Can You Afford?

Written by Carrie Reeder


Maybe you’ve heardrepparttar expert advice that your debt to income ratio shouldn’t be more than 36 percent of your total income. But do you truly know what that means, and how lenders will look at your financial history in order to decide whether or not to extend you a mortgage? If you need help figuring out your debt to income ratio, simply followrepparttar 146238 guidelines below and soon you’ll know whether or not you’re in a position to apply for a mortgage loan.

Your debt to income ratio isrepparttar 146239 amount of monthly debt you pay out in contrast to how much income you have coming in. Start by figuringrepparttar 146240 easy part—your income. If you are on a structured paycheck, then it will be easy—simply calculate your monthly salary. If you work on a commission or other type of varying income, total your last six month’s earnings and divide by six.

Now you will need to figure your monthly debt. You should total your car payment, credit card payments (userepparttar 146241 minimum amount payments for this calculation, even if you pay more), any other monthly debt—such as child support payments—along withrepparttar 146242 estimated amount of your new mortgage payment.

Cont'd on page 2 ==>
 
ImproveHomeLife.com © 2005
Terms of Use