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Recent problems in the housing market have
been hard to ignore — even if you haven't
directly experienced declining home
values, higher interest rates on mortgages or
more stringent lending standards. But what does
it all mean for you, especially if you're
thinking about buying a new home or refinancing
an existing loan?
While it's true that the best home
loan may be tougher to get than in
the past, you shouldn't be discouraged; many
good loan programs are still available to
homeowners. The key is to...
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The recent mortgage mess has highlighted
just how important it is to fully evaluate home
loan rates before signing on the dotted line.
Specifically, for the best home loan,
prospective borrowers need to carefully compare
fixed-rate and adjustable-rate loans, even if
ARMs carry a lower initial interest rate.
With a fixed-rate mortgage, you pay the
lender the same, fixed interest rate over the
life of the home loan, which usually will be 30
years but...
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A home loan or mortgage is a product,
just like a car, so the price and terms may be
negotiable. Shopping, comparing, and
negotiating can net you the best home loan
rate, and may save you thousands of
dollars.
Home loans are available from several types
of lenders - thrift institutions, commercial
banks, mortgage companies, and credit unions.
Different lenders may quote you different
prices, so it's best to contact several
lenders to make sure you’re getting the
best home loan rate.
You can also get a home loan through a
mortgage broker. Brokers arrange transactions
rather than lending money directly; in other
words, they find a lender for you. A broker’s
access to several lenders can mean a wider
selection of home loan products and terms from
which you can choose. Still, brokers are
not obligated to find the best deal for you
unless they have contracted with you to
act as your agent. Consequently, you should
consider contacting more than one broker, just
as you should with banks or thrift
institutions.
Brokers Mean
Added Fees
Whether you are dealing with a lender or a
broker may not always be clear. Some financial
institutions operate as both lenders and
brokers. And most brokers’ advertisements do
not use the word "broker." Therefore, be sure
to...
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Lenders consider many things in deciding
whether to extend a home loan. Not all lenders
use the same factors, but most lenders do
reserve their best home loan rate for
a borrower who can demonstrate income and debt
ratios sufficient to meet or exceed
monthly principal, interest, taxes and
insurance payments.
Common
Guidelines Lenders Use When Evaluating A Home
Loan
- Capacity - Lenders
will review your employment history to
determine if you have the capacity to repay
your debt obligations - specifically, the
home loan in question. How long
have you been working at your current job?
How much do you earn? What is your future
earning potential?
- Credit - Lenders will
review your credit history, consider how
much debt you have incurred, and how you
manage your debt responsibilities. How much
do you owe? Do you pay your monthly bills
on time? Are you consistently late in
paying bills?
- Character - Lenders
will look at how you pay your bills. They
will also take into consideration any
history of lawsuits or bankruptcies.
- Collateral - Lenders will
evaluate the value of the property, a
source of protection for the money they
lend. The lenders want a guaranty that they
will get back the money they lend. Is the
property worth the risk?...
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more...
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