Anthony Frankson asked:




Explanation: Mortgage Types – Fixed Rate Mortgages

The basic mortgage has always been the 30 Year Fixed Mortgage. With this type of mortgage you get an interest rate that stays the same (fixed) for the entire length of the term. What this means is that you can count on paying the same monthly payment for the next 30 years without any “surprise” increases in the amount. You know what your payment will be each month and you can make your budget accordingly. There are now 15, 10 and even 5 year fixed mortgages but they come with a hefty monthly payment.

Explanation: Mortgage Types – Adjustable Rate Mortgage

Another mortgage example is the Adjustable Rate Mortgage or ARM. This type of loan adjusts to the fluctuations in the interest rate that is determined by certain market forecasting indexes. The interest rate of this loan is initially lower than the fixed rate but after the introductory period the loan then begins to fluctuate. This is a good choice when interest rates are low but can be burdensome when interest rates are high. One disadvantage of these loans is that you cannot predict exactly the monthly payments because they are subject to change.

Explanation: Mortgage Types – Convertible Mortgages

Convertible Mortgages are another example. This is a kind of hybrid of the fixed and adjustable mortgage. This is popular because it has flexible options; when rates are high you can convert to the fixed rate and when the rates are low you can convert back to the adjustable rate. This loan has other names such as Reducing Interest, Reduction Option, etc.

Explanation: Mortgage Types – FHA and VA Loans

The final two mortgage types are for special social categories. The FHA Loans by the Federal Housing Authority guarantees the repayment of loans made by private lenders to low and moderate-income level populations. VA Loans, by the Veterans Administration, guarantees the repayment of funds made by private lenders to qualified veterans who have served in the United States Armed Forces and the National Guard.

This is just a simple basic overview of the mortgages available today. With the above information you must now begin to get much more extensive information on the specific features that fit your particular situation best. The Internet is your best source for finding out this information because it allows you to make comparison rate shopping very easily.

The Internet is also the best resource for finding a lender with whom you can do business. Be sure to have an in depth discussion with your lender about the particular loan you are getting before you sign any papers binding you to a contract. Remember, never sign a contract if you any doubt about the terms of the mortgage agreement that is presented to you.

Jamie

Blank asked:


Interest rates and home prices have risen over the years making it harder and harder for first time buyers to qualify for a home loan. Many financial analysis say now is the time to buy a house before rising rates price you totally out of the market. But what if you have bad credit? Can you buy a home right now if your credit is not up to par? For a lot of consumers with bad credit the answer to that question is yes. If you have had credit problems but have a minimum credit score of 580 and stable income, in most cases, you will be able to qualify for a bad credit home loan aka sub-prime mortgage loan. Sub-prime mortgage loans specifically cater to people who have had credit problems such as bankruptcy, late payments, judgments, collections and a high debt ratio. So… what this means is if you have these type of problems you may still be able to buy your dream home now rather than having to wait years while you try to clean up and re-establish your damaged credit history.

With a bad credit home loan you should expect to pay a higher rate than you would with a standard conventional loan. How high of a rate you pay will depend on several factors:

Your credit score

Your debt ratio

The severity of your bad credit

The lender you choose

If your situation places you on the higher end of the interest rate scale then you should view your loan as a temporary solution to turn you into a homeowner with the ultimate goal of improving your credit standing so that you can refinance to lower rate loan in 2-3 years.

Bad credit home loans are not available from all mortgage lenders. Only those lenders who specialize in or offer sub-prime mortgage loans will offer these programs. Make sure you are honest up-front about your financial situation and your credit history when you go to apply for a home loan so that your credit does not get pulled needlessly by a lender who does not even offer the kind of loan products unique to your situation. Just one unnecessary inquiry hit to your credit can be disastrous if you are teetering on the brink of the minimum 580 credit score because every time your credit report is pulled it has the potential of lowering your score even further.

Most lenders who do offer bad credit home loans will advertise this fact. There are also resources on the web that can steer you in the right direction. Websites such as http://www.badcreditloanshop.com and http://www.equityloansource.com offer a wealth of information on home loans for people with bad credit as well as sub-prime mortgage lender sources.



KURT