mortgage loans suspension houseFinding Mortgage Loans in today’s chaotic financial world can be a challenge. However, mortgage loans that fit your personal financial situation are out there – it just takes a little patience, research, and realistic goals. The quest for mortgage loans is by no means an epic journey. In fact it’s quite a routine process of combing through a file of lenders, comparing mortgage loan packages, and asking the advice of family and friends.

There are loan packages of every dollar amount and payment period conceivable. The process is a lot less tiresome if you know precisely how loans work. If you intend to stay in your home for a long time, for instance, selecting an adjustable-rate mortgage (ARM) may not be to your advantage. The interest rate on an ARM will change after a determined time. As the casualties of the recent subprime mortgage situation will inform you, if your home drops in value, it may bar you from refinancing your mortgage when the ARM’s initial rate ends.

Remaining in your home for a longer stretch of time may call for a fixed-rate mortgage. If you feel anxious about carrying debt, and would like to pay off the mortgage loan as soon as possible, opt for a 15-year term in place of the 30-year package. Your monthly payments will be more, but you’ll save thousands in interest in the long term.

Once you have an idea of what type of mortgage loan you’re looking for, you can start shopping. Thanks to the phone book and the Internet, you can shop anywhere for a lender, and at any time of the day or night. You can contact the lender down the street, as well as credit unions and banks in your general area. You can also lookup “mortgage loans” on the Internet, and compare the various interest rate quotes.

Mortgages represent one of the greatest financial decisions in life, and lenders play a predominant role in the process. The stakes are high, so, take your time and make a careful, calculated search. You may not come across a perfect mortgage, but you’ll find the one that’s the best fit for your long financial voyage. Contact the top 5 lenders on your mortgage rate quote file. Ask for credentials, and question your friends and neighbors to substantiate that the lender is reputable. Even if the rate is a little higher, choose a lender that you believe is reliable and customer-focused.

The present mortgage crisis is revealing some frightening stories, but you don’t have to turn into one of the unhappy statistics. Protect yourself from financial disaster by understanding your mortgage, respecting your budgetary limits, and being direct with your lender. While the cause of the recent credit crisis and housing mess can be traced to a number of factors, including predatory lending, hindsight is always clearer than foresight. Protect yourself by getting to know your mortgage loan so that you can make accurate and advantageous financial decisions.

If you have selected an adjustable rate mortgage (ARM), consider refinancing into a more dependable and safer fixed-rate plan. Otherwise, the interest rate could soar and leave you with an unmanageable monthly payment. Choosing an interest only mortgage or negative amortization loan in the current real estate climate is also extremely risky, because you will be making payments for years without reducing your mortgage debt. Your existing lender may impose a penalty for paying off your mortgage loan early, so before refinancing, check the small print on your loan contract. If necessary, request that your lender to waive that stipulation. Some home owners have been successful in getting those penalties discharged, so objecting to them is well worth the effort. If you’re confronting foreclosure, seek professional financial help from a credit counseling agency or your lender. Lenders are anxious to avoid defaults, and may be amenable to working out new mortgage loan terms to help you ride out the storm.

One of the basic principles in managing debt is to have a clear idea of how much you can afford. The mortgage industry in the past applied a 4-to-1 rule to determine whether a consumer was equipped to repay a home loan. A monthly income of four times your mortgage loan payment was considered a strong position. However, lenders and borrowers in recent years threw caution to the wind in their desire finance and buy increasingly expensive homes. Today, it’s not unusual for a homeowner to shell out half of his income on a mortgage, and that’s certainly too much debt for a reasonable consumer. If your mortgage is taking a third of your budget, you may want to work out a way to refinance the loan to lower payments. If you are paying out more than that, you need to adjust your budget to avoid the dangers that can result if your income falls, your mortgage rate jumps, or your home’s equity shrinks.

A good working knowledge of mortgage loans, and the problems they can create, will benefit you in the future as well as now. Only you can know the right time to purchase your first house.
Clearly, now is a great time to buy that first house. Mortgage rates are now the lowest in decades, and the real estate market is a buyer’s paradise with hundreds of thousands of homeowners desperate to sell. You can get an under priced house at a great rate, particularly with the new homeowner tax credit.

But, if you’re not ready financially, it’s not feasible to extend yourself with a house that you can’t actually afford. Renting may be your best option for the present. You can always buy a home later. If you get burdened with an ill advised debt now, it may take years to recover from it.

The listed price of a home is only a part of the equation. If you know how much cash you have for a down payment, are familiar with your credit score, and understand and can factor in the costs for insurance, taxes, and regular maintenance, you’ll have a much better grasp of what you can afford. The fact that you can afford the new home doesn’t necessarily mean that you should buy now. For instance, you may be able to swing a 3.5% down payment through an FHA loan for a mortgage loan, but perhaps you’d be better off waiting till you can put 20% down to reduce your monthly payments.

Also, you probably can find a lender who won’t require that you adhere to the 3 to 1 rule (income to mortgage payment, taxes, and insurance), but that doesn’t mean you should buy. The load of the higher monthly payments could mean that you have to forego vacations or a new auto every few years. Just because you’re now able to buy a house that was out of your price range before, doesn’t automatically mean that you should. A house that wasn’t selling before because it was of poor value, probably doesn’t suddenly become a good value because you found cheaper financing. Also, a couple must ask themselves if they can afford the mortgage loan on just one income. Especially in today’s uncertain job market, you may need some insurance in case one person loses their employment.

So finally, when is the right time to purchase a first home? It’s when your credit score is sound enough to secure a low rate, your other debts are low or paid off, you have sufficient funds to pay the closing costs, you have enough money for emergencies, and you feel sure that you could pay the mortgage loan on one salary in the event that one wage earner loses their job. It’s never the right time to buy a home if your finances can’t justify it. In many cases, it may be wiser and cheaper, in the short term, to rent.

Back to the top of Mortgage Loans.