Choosing the Right Home Loan in Today’s Mortgage Market

Do not let all the media hype scare you away from your goal of purchasing a home. Mortgage rates are still excellent and most loan programs are very safe if you are working with a reputable Mortgage Lender.

Many of the mortgage problems today have occurred because people chose 100% or interest only financing. Many were in what are called an 80-20 mortgage. It was an 80% first mortgage and a 20% second mortgage. The 20% second mortgage many times was an equity mortgage that had an adjustable rate. When interest rates started going up, the interest only loans and the second mortgage payments increased dramatically, making it difficult for people to manage the larger payments. Even in an appreciating real estate market that is risky if you are on a limited income. If you choose the 80-20 mortgage route, make sure the 20% is also a fixed rate. (These loans are now almost extinct.)

Here are some tips to help you choose the right mortgage in today's mortgage market:

• If you need a 100% loan -- get a fixed rate so you will know exactly what your payments will be and they won't change. Also, if you choose the 80-20 mortgage route, make sure the 20% is also a fixed rate.
  
• Do your homework and weigh down payment vs. 100% loan. The more down payment you make, the easier it is to get a loan and you may also get a lower interest rate.


• Choose a local reputable Mortgage Lender. You will be less likely to risk being involved with a lender that may be in trouble, which could cause loan funding problems as you approach closing.


• Get pre-qualified before you begin looking for a home. This prevents you looking at homes beyond your price range. Of course, you are going to want to purchase the nicer, higher priced home if you see that first. By today’s standards, you may qualify for much more than you may be comfortable with and just because you are pre-qualified you don’t have to spend the maximum amount.


• Do not be talked into purchasing a home that is beyond your budget. You may not be able to buy your dream home this time but you will be investing in your future by building equity in this home to invest in the dream home at a later time.

There are many types of loans available to you. Be sure you are comfortable with the monthly payment and that you know what your payment will be, should interest rates increase. Insist the mortgage lender explain completely anything you do not understand. No question is a dumb one and we sometimes forget that most people do not understand the mortgage lingo.

For a more detailed explanation of the mortgage process and a recommendation for local lenders who meet the above criteria please contact FOR HomeBUYERS, Inc. at 800-333-2893 or visit www.ForHomeBuyers.com. You may also attend our next Home Buying Seminar, “How to Avoid Costly Home Buying Mistakes” on January 8, 2008.