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 of 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 with basics—those terms can be pretty confusing!Here’s a basic guide to 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 for life of loan. If interest rates skyrocket, yours will remain same. On 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 with market. In other words, if interest rate is low, rate on your home mortgage will be low, but if it’s high, your loan interest rate will reflect it. And because interest rate on a home mortgage loan affects 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 heard 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 follow 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 is amount of monthly debt you pay out in contrast to how much income you have coming in. Start by figuring 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 (use minimum amount payments for this calculation, even if you pay more), any other monthly debt—such as child support payments—along with estimated amount of your new mortgage payment.
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