If you don't already know it, the real estate market has changed in the last couple of years and the days of easy home mortgages are gone. So if you are in the market for a home mortgage, it's time to start doing your homework.
When house prices were steadily rising just a few short months ago, it was easy to get mortgage money. But now that things have been cooling off and the steady increase in prices has virtually come to a halt, banks and mortgage lending institutions have made borrowing more difficult.
Perhaps most important, interest rates have been rising slowly for a number of months. This may not seem like a big deal if you are new to the home buying market. But on a large home mortgage even a small interest rate increase can make a very big difference to your payment.
In fact it is usually the interest rate that determines how much you can borrow, so it is the interest rate that often makes the difference between being accepted or rejected for a home mortgage. The reason is simple. To qualify you for a home mortgage the lender determines what payment level you can afford. And since a big part of your payment will be interest, a higher interest rate could easily put the payment out of reach.
**The importance of your home mortgage advisor**
One of the first things you should do before making home mortgage decisions is to find a professional advisor who has a lot of experience in the home mortgage business. Look for an advisor who has in-depth and current knowledge of real estate and mortgage trends and can make use of many different sources of mortgage funds.
This will usually not be your friendly neighborhood banker. Banks work with their own products and are not interested in making you aware of other products that might offer a better deal.
Look at it this way: if you have a good credit rating you can probably get a better deal than the one your bank is prepared to offer. On the other hand, if you have credit problems or need some creative suggestions, you'll probably not get them from a bank. They want you to conform to their requirements and rules.
Yes, a bank is fine if you aren't interested in getting a better deal. However, if you want alternatives or creative suggestions you're better to go elsewhere.
The altenative is to find a home mortgage advisor who knows the market inside out and who has access to many different solutions from many different sources.
**Good deals are still available**
Even when credit starts tightening up there are ways to get a good deal on a home mortgage. Sometimes these good deals involve government backed loans such as FHA loans. These loans exist to help people with even horrible credit to borrow as much as 97 percent of the value of their home. The primary requirement is that they have the necessary income to make regular payments.
Home mortgages like these are very good deals for many people. They make home ownership possible for many people who might not otherwise qualify. But many traditional lenders either don't know about these options, or they won't recommend them because there is not enough profit in it for them.
In fact many mortgage brokers won't recommend these loans either because they take extra work. However, from your point of view it is really worth finding a mortgage broker who will find the best deal for you. It could save you literally thousands of dollars over the life of your mortgage, and it could make an otherwise impossible mortgage a reality.
**An ARM can be a good short term solution**
Another mortgage option is called the "option adustable rate loan", commonly referred to as an ARM. If you qualify for this kind of home mortgage you could pay as little as 1% interest against a "real" rate of about 7.25%. To qualify you need a very good credit rating.
But be careful with plans like this. The lending institution will add the unpaid interest to the principal of your loan, so the amount you owe actually goes up over time. That means that eventually you will have to start making payments against the increased principal amount. So your payments will actually be higher than they otherwise would have been. You could end up with payments that are more than you can afford to pay.
But this approach does give a borrower the option of making drastically reduced payments for a short period of time. It is used most often when a person has serious short term cash flow problems, or when they forsee their financial situation significantly improving a year or two in the future.
**What a different the right mortgage makes**
While it is becoming more difficult to qualify for a home mortgage, and more expensive to afford one, there are still money saving deals available from many different sources. But you have to know how to find those sources, and that's why it is so important to deal with an experienced professional advisor you can trust. Look for someone who has in-depth knowledge of the current home mortgage situation and who is experienced in dealing with situations like yours.
The best advisor is a broker with a great deal of experience and many different lenders to draw on. That kind of broker can find an affordable home mortgage for almost everyone.
When house prices were steadily rising just a few short months ago, it was easy to get mortgage money. But now that things have been cooling off and the steady increase in prices has virtually come to a halt, banks and mortgage lending institutions have made borrowing more difficult.
Perhaps most important, interest rates have been rising slowly for a number of months. This may not seem like a big deal if you are new to the home buying market. But on a large home mortgage even a small interest rate increase can make a very big difference to your payment.
In fact it is usually the interest rate that determines how much you can borrow, so it is the interest rate that often makes the difference between being accepted or rejected for a home mortgage. The reason is simple. To qualify you for a home mortgage the lender determines what payment level you can afford. And since a big part of your payment will be interest, a higher interest rate could easily put the payment out of reach.
**The importance of your home mortgage advisor**
One of the first things you should do before making home mortgage decisions is to find a professional advisor who has a lot of experience in the home mortgage business. Look for an advisor who has in-depth and current knowledge of real estate and mortgage trends and can make use of many different sources of mortgage funds.
This will usually not be your friendly neighborhood banker. Banks work with their own products and are not interested in making you aware of other products that might offer a better deal.
Look at it this way: if you have a good credit rating you can probably get a better deal than the one your bank is prepared to offer. On the other hand, if you have credit problems or need some creative suggestions, you'll probably not get them from a bank. They want you to conform to their requirements and rules.
Yes, a bank is fine if you aren't interested in getting a better deal. However, if you want alternatives or creative suggestions you're better to go elsewhere.
The altenative is to find a home mortgage advisor who knows the market inside out and who has access to many different solutions from many different sources.
**Good deals are still available**
Even when credit starts tightening up there are ways to get a good deal on a home mortgage. Sometimes these good deals involve government backed loans such as FHA loans. These loans exist to help people with even horrible credit to borrow as much as 97 percent of the value of their home. The primary requirement is that they have the necessary income to make regular payments.
Home mortgages like these are very good deals for many people. They make home ownership possible for many people who might not otherwise qualify. But many traditional lenders either don't know about these options, or they won't recommend them because there is not enough profit in it for them.
In fact many mortgage brokers won't recommend these loans either because they take extra work. However, from your point of view it is really worth finding a mortgage broker who will find the best deal for you. It could save you literally thousands of dollars over the life of your mortgage, and it could make an otherwise impossible mortgage a reality.
**An ARM can be a good short term solution**
Another mortgage option is called the "option adustable rate loan", commonly referred to as an ARM. If you qualify for this kind of home mortgage you could pay as little as 1% interest against a "real" rate of about 7.25%. To qualify you need a very good credit rating.
But be careful with plans like this. The lending institution will add the unpaid interest to the principal of your loan, so the amount you owe actually goes up over time. That means that eventually you will have to start making payments against the increased principal amount. So your payments will actually be higher than they otherwise would have been. You could end up with payments that are more than you can afford to pay.
But this approach does give a borrower the option of making drastically reduced payments for a short period of time. It is used most often when a person has serious short term cash flow problems, or when they forsee their financial situation significantly improving a year or two in the future.
**What a different the right mortgage makes**
While it is becoming more difficult to qualify for a home mortgage, and more expensive to afford one, there are still money saving deals available from many different sources. But you have to know how to find those sources, and that's why it is so important to deal with an experienced professional advisor you can trust. Look for someone who has in-depth knowledge of the current home mortgage situation and who is experienced in dealing with situations like yours.
The best advisor is a broker with a great deal of experience and many different lenders to draw on. That kind of broker can find an affordable home mortgage for almost everyone.