Home Mortgage Loan
With a home mortgage loan, a bank or other lending institution finances a loan for a borrower using the home as collateral. If the borrower fails to make the payments on the home mortgage loan, the lender can foreclose on the property and resell it, thereby recouping most or all of the money loaned to the borrower.
Home Mortgage Loan Options
There are many home mortgage loan options to choose from. The traditional choice is a fixed rate loan. Here the interest rate never changes over the life of the loan, providing stable and unchanging loan terms. With an adjustable rate mortgage, the rate fluctuates based on a predefined index, which is good for the borrower during times of low interest rates but difficult for a borrower if the rates are high.
There are a host of other home mortgage loan options beyond this; reverse mortgages, home equity or second mortgages, FHA, LIBOR, interest only, subprime and hard money loans, to name a few.
Finding The Right Lender
Find a good mortgage lender is an important first step. Of course, borrowers can go directly through a bank or lending institution, not the worst choice if you have a good history with the bank, solid credit and income. However, a lender can shop the loan to a whole host of funding sources and can look for the best possible rates and terms available at that time. If you don't have a relationship with a trusted mortgage lender, it is a good idea to interview several, focusing on their experience and past success, how they make commission and contacting several references for each.
Once you find a lender, you will need to get pre-approved for your loan.
This process entails filling out paperwork so that the lender can evaluate your overall strength as a borrower, looking at credit or FICO score, credit history, as well as current income and debt sources. Your lender will typically then discuss what kind of a loan and how much of a home mortgage loan you qualify for.
Finding the right home loan is the fist step towards owning a great piece of property that can provide you both a place to live and insure a strong financial future. Interest on a home mortgage loan is tax deductible, providing a great tax write off each year. With 20% down and a nice steady appreciation of your home, a borrower can expect their home to greatly help their net worth over their lifetime. However, it is important to find a loan that you feel comfortable with payments that do not stretch your budget too thin. Keep these points in mind and go out and find a great home loan!