Home Financing – How to Find the Best Deals

When it is about time to take the idea of buying a house through home financing seriously, you surely would want to get everything right and make sure that you are able to find the best deal without going through difficulties. But how would you do it?

Here’s how…

Shop around. Do not settle with the first financial institution you come across.

There are lots of financial institutions you can apply from. Each promising unique deals that will surely attract you – each, promising a deal that perfectly works for you. If you do not know what you are doing, you will be easily persuaded by the first home financing representative you talk to. Avoid this at all cost, especially if it is very apparent that the deal is going on your best interest. Remember, you are not obliged to make a final arrangement with any financial advisor. What you have to do is to talk to several home financing companies and discuss your plan for home financing. Competition is stiff in this business so companies try to offer competitive deals, including lower interest rates and better terms. If you look around, you will be able to find the best deal.

Remember: there is no such thing as universal home financing term fit for everyone.

You are the only one who knows what type of home financing term fits you. Coordinate with your loan advisor which type of loan is perfect for you. In the end, if choose correctly, the loan you took is the least of your problems.

Do your research.

Borrowing money is not a favor you ask to lenders. Take note that they also profit from you. If you end up taking loan with a wrong company, you may have to suffer severe consequences resulting from hidden charges and missed repayments. Making sure that you find the most reputable lending should be in your high priority list. Compare different lender and identify which among them is the most reputable one.

Consider your future plans.

Are you planning to stay at your home for a very long time? Or, are you planning to refinance your home or move out after several year? Do you have enough money to pay for higher mortgage for a shorter period of time?

Home mortgage can be 15- or 30-year fixed rate mortgage or adjustable rate mortgage or ARM. These two have their own pros and cons. To get the best deal, consider your future plans. A fixed rate mortgage will let you plan for the monthly payment of the house better since the amount you pay will not change throughout the loan term. Taking a 30-year fixed rate mortgage will work for you if are planning to stay at the house indefinitely. A 15-year fixed rate mortgage on the other hand is ideal for people who can afford higher mortgage and want to significantly reduce the interest rate they pay.

The adjustable rate mortgage or sometimes called hybrid loan adopts the fixed rate mortgage at the beginning of the loan and will adjust after the fixed rate period expires. For example: the 5/1 loan has a fixed interest rate for the first 5 years. The rate will adjust every year after that. People who plan to move out or refinance the home after several years within the loan period often find ARM effective.

Anticipate the interest rate adjustment.

Getting the best deal also lies on your anticipation on the future interest rate basing on the current trend. During recession, the interest rate can go down which is very advantageous for those who take ARM. Still, taking ARM has a great risk involved. The interest rate can jump by several percent in just one year. But those who take the fixed rate mortgage will enjoy the same amount of mortgage regardless of the jump of interest rate. The point is, you can capitalize on looking at the trend interest rate to get an idea of what type of loan to take.

Finally, negotiate.

We mentioned a while ago that the competition is stiff in this business. Use it as your advantage and negotiate your terms to every lender representative you talked to. Do not get tired of this. Persistence is the key. And before you know it, you have found the best home financing deal that fits you best.

Real Estate Financing Options

When you’re putting an offer on a piece of real estate, you want to already have your financing decisions made. There are several main types of financing available. You should do your research for your specific financial situation before you put an offer on a piece of property, so you can make sure you’re getting the best possible loan for your particular needs and financial background.

FHA or VA loans

FHA or VA loans are loans that are backed by the FHA or VA. These are loans that can be offered to first-time homebuyers and veterans with low or zero down payments. FHA and VA loans are insured for the lenders. When you apply for an FHA or VA loan, you’ll go to a traditional lender like a bank or mortgage broker and will get the loan through that organization.

If you meet certain requirements by the FHA or VA, you can get these loans that are insured by these organizations to protect the lenders from potential foreclosure. These insurance policies allow the lenders to give you an incredibly low interest rate and a minimal down payment with minimal closing costs. The goal for these programs is to put people in homes that they otherwise perhaps would not be purchasing.

Traditional Loans

Traditional loans through banks, credit unions, or mortgage brokers aren’t insured like the FHA or VA loans, so you’ll likely be paying a larger down payment (about 15 percent) and have a slightly higher interest rate. These loans are for those who want to make a sizable down payment on their homes in order to have smaller monthly payments and to have some instant collateral in their homes. If you’re seeking a traditional mortgage, shop around to find the best deal for you.

Talk with different lenders about how much of a down payment you want to make and how much of a loan you’re looking for. Shop not only for the best interest rate and monthly payment, but also look at closing costs and other fees that the lenders would be offering you. Take the time to apply for several different traditional loan situations so you can find the best deal for you.

Rent-to-Own

Owner-finance situations are also a popular way to have financing for your home. If you don’t believe you would qualify for an FHA or a VA loan and you don’t have the cash for a down payment for a traditional loan, you may want to find home owners who might be up for financing the property themselves. Owner-finance situations are gaining in popularity, as more people are investing in real estate rental property and want long-term people in their properties. In an owner-finance real estate situation, you live in the home while the owner continues to own the property. You sign an agreement with the owner that you agree to pay a monthly rental fee for a set particular number of months, after which time the property then either becomes yours or you will make a large balloon payment or obtain a loan to acquire the property at a set cost. In many owner-finance situations the person buying the home typically will pay a higher interest rate and higher monthly payments in order to one day become the owner of the property.

So you see there are some options for financing when purchasing a home and you need to do your research to determine which is the best fit for you and your financial situation.

Real Estate Financing – You Can Get A Home Mortgage With Bad Credit

As the real estate market continues to grow rapidly and new technology gains ground, widely accepted beliefs that were true a few years ago may not be true today. Don’t jump into anything blindly or sign a real estate contract or home mortgage loan contract or any other type of contract without giving it some serious thought. Before you commit to a real estate purchase you’ll need to find a lender for the real estate financing of your potential home or investment property.

Your income and your debts will typically play the biggest roles in determining what price range you should be looking at. Fifteen-year mortgages are an ideal option if you can handle the higher payments and if you’d like to have the loan paid off in a shorter period of time. Thirty-year fixed-rate mortgages offer consistent monthly payments for all of the 30 years that you have the mortgage. And if the market is good, you can benefit considerably from locking in a lower rate for the full term of the loan.

Most adjustable rate mortgage programs offer what is called “rate cap” protection, which limits the amount the rate can be increased each year and over the life of the loan and all adjustable rate mortgages are amortized over 30 years. Make sure to get an estimate of your real estate financing closing costs from the lender you’ve chosen. By law, the lender is required to give you a statement within three days of receiving your loan application. Any of the loan programs for down payments of 20% or less require you to purchase Private Mortgage Insurance (PMI).

A mortgage application can be resubmitted many times; it’s not uncommon for this to happen. Interest rates can go up if a picture is painted of a rosy economy and that it is flourishing, like more jobs being available. This can lead to inflation which will make the rates go up. Any money that you receive from a lending institution will show up on your credit report and the payments will factor into your debt-to-income ratio.

A reported FICO credit score is not a requirement for most conventional or government loans like FHA loans or VA loans. Potential borrowers can submit information about income, assets and equity to determine just how much a down payment should be. This is usually processed through an automated underwriting system. Twenty-year fixed-rate mortgages allow you to make a consistently higher monthly payment throughout all 20 years you have the mortgage. The shorter term means you pay off the loan off quicker and pay less interest and build equity faster than with a 30 year loan.

Check with you CPA pr other tax advisor for the most current tax information; your property taxes may be deductible. If you’re working with a home builder within a sub-division or housing development and just making carpeting, lighting and appliance selections for a brand new home, you’ll probably be able to get a standard mortgage loan. If you’re hiring contractors, electricians, plumbers, and painters, you’ll probably need a construction loan, which provides funds to pay the subcontractors as the work goes along. If you plan to borrow money from other sources, some lenders may impose limits on how much of your down payment can come from other sources.

When financing real estate with a conventional loan it’s important to know that a low FICO credit score does not mean you won’t qualify for a home loan or home mortgage. The FICO credit score is just one of many factors that are considered in loan or mortgage applications. Although the FICO score is taken into account there are no minimum scores required.

Ask other homeowners for advice about what real estate and mortgage pitfalls to look out for. Work with a reputable mortgage broker or lender to create a customized loan program with the best combination for you of rates, points, and closing costs to meet your needs. Before you finish with any real estate financing make sure you read every real estate contract and loan or home mortgage contract carefully before you sign on the dotted line. Each and every line is important – look for anything that’s vague or not clear and don’t be afraid to question what you don’t understand.