Home Loan Solutions

By: EconomyWatch Content   Date: 17 December 2009

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There are lots of intricacies involved in taking a home loan, especially for first-time buyers. For instance, there is a large variety of loan products available, including fixed rate (15- and 30-year), FHA loans, HUD loans, jumbo loans, negative amortization loans, interest only loans and 7/1 and 5/1 ARM’s. All these loan types have their pros and cons, which need to be fully understood before signing a document.

 

Moreover, there is a long list of financial terms, such as APR, future value, present value, simple interest, compound interest and amortization, that a borrower should be clear about. With the huge load of paper work involved and constantly released creative financing options, even seasoned borrowers might at times be confused about which loan to choose. A single mistake can cause a loss of hundreds of dollars. However, the housing market offers various home loan solutions to borrower, which can help one make a sound purchase.

 

Home Loan Solutions: Making a Prudent Purchase

 

The Housing And Urban Development (HUD) provides a HUD settlement booklet that covers the various aspects of home loans and the financial terminology. It also provides thorough details regarding ownership, home buying, home selling and predatory lending. One can get helpful information and save one’s legal and financial interests trough this booklet.

 

You can also gather home loan information by contacting at least three lending companies. These companies appoint loan officers who possess first-hand information on all the loan products in the market. In order to gain more business in the form of a new customer, they will be more than willing to help you understand the details of the various products. After you gather the details from three companies, compare the terms and conditions and the rates to choose the one that suits your financial circumstances. A mortgage broker can also be contacted, since s/he is an expert in offering advice on the home loan products currently available in the market.

 

If your purpose of buying a home is to invest in new property, a 15-year mortgage might make sense. On the other hand, if you are a first-time home buyer a 30-year fixed rate mortgage is the best option for you. This is because a 15-year mortgage comes with higher monthly payments and if you lose your job during that period and do not have any other source of income, your new home may be foreclosed. Monthly payments are lower in a 30-year mortgage and you can pay it off earlier by making one or two additional principal payments every year.

 

The bottom line is that no home loan agreement should be signed if you are in doubt about anything in the agreement.


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