Understanding Mortgage Loans Will Save You Money
I want to buy a house so I better get a mortgage
. That is as much thought as many people give to the single biggest amount of money they will ever borrow. Many people know more about their cable TV package than they do about their mortgage. By learning as much as you can about a mortgage before you sign up for one you will be able to make sure you are getting the loan that is right for you.
Real estate loans are also called mortgages. They generally cover a portion of the purchase price with the rest of the purchase price being paid by the buyer in the form of a down payment. The amount of down payment that the buyer has to pay is dependent upon their credit history and the type of loan they are getting. For instance, if the buyer is getting an FHA loan they will pay whatever the current down payment requirement is to get that type of loan. The interest rate that the buyer gets is also highly dependent upon the buyer's credit score and past credit history.
Depending on your personal finances and how much money you have to use as a deposit you may be limited as to the type of loan you can get. Your credit score and your deposit amount will also affect how much interest you pay on your loan. In some instances it may pay you in the long term to wait before you get a mortgage, spend the time paying down your debts, improving your credit score and saving a deposit.
Cash is king, thsi may seem a strange comment to make when you are looking to borrow money to buy a house, presumeably because you don't have enough cash to buy one outright. The fact is that the more cash you have to use as a deposit the better you will be, the only way to get a 100% loan currently is to get a veterans loan. If you have never been in the armed forces then this option is not open to you, so you need to have a deposit. FHA loans can require as little as 5% while traditional loans are now often requiring a 20% deposit.
Due to a lot of sub prime lending practices in the past, many people ended up losing their homes which caused a huge shift in the way mortgage loans are approved and processed. Therefore, it is very important that any home buyer knows their credit score before they even think to apply for a loan. You need to have your financial documents in order including bank statements and W-2's so that you have the right information to supply to your mortgage loan officer.
by: Kevin Forcey
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