Deciding Which Mortgage Loan Is Right For You
Written by: Victor Bran
If you are looking to finance the purchase of a new home, then
you will likely be looking at more than one mortgage loan
option, including those with varying interest rates, payment
terms and length.
In order to choose the best loan for you, you will first want to
decide how many years you plan to live in the home that you want
to purchase. A conventional fixed rate mortgage is generally for
someone who plans to live in their home for an extended period
of time, which is typically 15 to 30 years. The fixed rate
mortgage loan is the most commonly sought of the various loan
programs. With this type of loan, the interest remains the same
for the entire life of the loan.
Another type of loan is the adjustable rate mortgage, which are
also known as an ARM loan, is one that allows the interest to
adjust based on current market rates. Interest only mortgages,
on the other hand, is when the homeowner is allowed to make
payments on the interest alone for a designated amount of time.
After that time expires, the payments are applied toward the
principal balance of the loan. Balloon mortgages allow for
smaller payments in the beginning with a large payment due at
the end of the term.
If you are looking to refinance your existing home or apply for
a home equity loan, mortgage lending companies, such as
Florida-based mortgage specialists
http://www.NorthstarFinance.us, will be able to help you select
the best loan for your needs. Through their pre-qualification
and application process, the applicant will learn just how much
of a mortgage they can afford. Before applying for any type of
loan, you will want to understand your credit report and it's
contents. In order to qualify for the best interest rates, you
will need to have a good credit history and no previous
bankruptcy listed in your credit file. With that being said,
there are loan programs designed especially for individuals who
have previous credit problems, including bankruptcy, or are
simply first time home buyers with little or no preexisting
credit. FHA loans, for instance, offer flexible loan programs
that may have lending options for these scenarios when a
conventional loan may be harder to obtain.
Now that you are familiar with the various types of mortgage
loan programs, the next step will be to determine which type of
loan that you may qualify for. In addition to your previous
credit history, your debt to income ratio will be a very
important deciding factor. Lending institutions will look at
your income and current date before deciding whether or not to
extend credit. If you currently owe a substantial amount of debt
compared to your current income, then you may need to consider a
debt consolidation loan before applying for a mortgage. A debt
consolidation loan can take all of your current bills and
combine them into one low monthly payment, which may free up
some extra cash to allow for a mortgage approval.
Located in Florida, http://www.NorthstarFinance.us is a mortgage
company specializing in various loan programs, including
mortgage, debt consolidation, home equity lines of credit, etc.
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