Saturday, November 2, 2013
Home Financing Loans
There are many home financing loans, so choosing the right one is important. Educating yourself is the wisest investment you can make. So, be sure to fully educate yourself on home financing loans. You should learn: what APR means, what "fixed" means as opposed to "variable," the different types of loans, the loans for which you qualify, the current rates, how many years you want to pay off your house and the total cost to move into your home.Home is what you make it, and so are home financing loans. Before you apply for a mortgage, obtain your credit report. This information is very important for the application process. First, you will need to decide on a lender and sign a purchase contract. Next, you get a credit approval which verifies your income, your ability to pay the loan and any liabilities you may have. Then, present all proof of income, assets, and debts to the lender. This information is essential for the application process. You may be charged an application fee. Inquire about this before your appointment with the lender. The total application process can take between one and eight weeks.The market fluctuates so much that interest rates can go up or down within a day and even within an hour. You have the option to lock in your interest rate. Make sure that the lock-in period will not expire before you close on escrow. Most often, you can lock in this rate on home financing loans between 30 and 60 days. Be sure to ask whether there is a fee for this option and whether it is refundable.Home financing loans vary, but they are either fixed or adjustable. A fixed rate means that the rate does not change. Conversely, an adjustable rate does change. Adjustable rates are typically lower, but these types of loans are more risky because the rate can drastically increase.The APR is the annual percentage rate. The APR and the interest rate are not the same. The APR takes into account the cost of the loan on a yearly basis, which includes interest, any origination fees, and insurance. For example, as of the date of this article, a 30 Year Fixed Rate for the market is at 3.75% for the interest rate and 3.88% for the APR.It is possible to "buy down" your interest rate. You pay in points. A point is 1 percent of the loan amount. For example, one point on a loan of $100,000 is $1,000. Naturally, whether this is a good investment depends on how long you intend to live in your home. The longer you live there, the more financial sense it makes to choose this option.Ask your lender specific questions. Find out the interest rate of the loan. Ask whether you will have to pay any points to "buy down" your interest rate. Find out what costs you will have to pay for, e.g. the closing costs. Ask whether there is a prepayment penalty.There are many types of home financing loans, the following are a few basics. FHA mortgage loans are insured by the government, allow you to pay a low down payment and can also decrease closing costs. VA loans are available to veterans and/or widows and widowers; they do not require a down payment. Additionally, an ARM loan, or adjustable rate mortgage loan, has a fluctuating interest rate which may rise or fall from day to day.