Home Loans

Buying a home of one choice requires huge amount of investment. It is next to impossible for an ordinary person to independently finance for such deals. In such case, he resorts to borrowing money. This borrowed money is known as loan. Technically speaking loan is a kind of a debt instrument that involves redistribution of financial assets between a lender and a borrower.

Loans can be taken for various purposes. However, home loans i.e. taking loans to purchase a home is in huge demand. Loans used to purchase real estate properties such as homes etc is also known as a mortgage. While borrowing a home loans there are various aspects which one must be aware of such as the type of loans, where and how can one borrow home loans, what does one need to pre-qualify for a loan, the kind of options available etc.

Home loans are generally of two types. A person borrowing home loans can either opt for a fixed rate loan or can go for adjustable rate loan. In case of fixed rate loan the payment amount and the rate of interest remains unchanged over the entire period of loan. Thus the borrower gets a fixed rate, irrespective of the changes in the market. On the other hand in case of adjustable rate loan/mortgage, the interest and the payment amount changes after a specific time period.

Private lenders, banks and various other financial institutions offer loans. Apart from these government-insured loans are also available. The Federal Housing Administration in association with the U. S. Department of Veteran Affairs provides these loans. The biggest advantage of such home loans is that they have low down payment and flexible lending guidelines and is thus a good option for first time homebuyers.

However, before going in for any loan programme it is best to know, whether one pre-qualifies for such home loan In fact pre-qualifying for a loan is considered to be first step in acquiring home loan. The pre-qualification of home loan is determined on the basis on one?s income, mortgage payment, rate of interest, debt and several other factors. In fact there are special mortgage calculators which help in determining whether one pre-qualifies for such loans. The maximum amount, which one can borrow, differs from lender to lender. The lender on the basis of various criteria such as one?s current income expenditure etc determines the maximum amount which one is eligible to borrow. However USA?s two largest secondary market lenders namely Fannie Mae and Freddie Mac have laid down a limit for conforming loans. Loans exceeding beyond that are known as non-conforming or Jumbo loans. Generally these loans are provided to high risk lender at a higher interest rate. Loans in the range of $1 to $2 million dollars come under this category.

In todays time anyone going in for a home loan has a wide range of loan programmes to choose from. Some institutions provide loans, which are designed with the purpose of avoiding private mortgage insurance. Such type of loans provides a good opportunity for tax deduction. As mentioned earlier an individual needs to fulfill certain criteria so as to pre-qualify for home loan. However for those individual who have financial constraints or those with less than perfect credit, special loan programmes are available for such people as well. ForeclosureRepos.com is a site that provides the best deal on home loan offered in the real estate market.

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