Besides the fact that it’s probably the average person’s largest financial transaction, buying or selling a home is one of those areas where mistrust and misconceptions are sure to be present. You can begin your real estate financing education by asking friends, family, co-workers, real estate agents, real estate brokers, mortgage brokers and real estate professionals for help, search online for local lenders and get current interest rate quotes. Now before you apply for any real estate financing, if you have a lot of bad credit because of consumer debt like credit cards or personal loans, you’ll want to try to eliminate or reduce this debt since it may affect your ability to qualify for a commercial or home mortgage and make the estimated monthly payment.
Keep in mind when you’re getting financing or refinancing that most people move or refinance within seven years. An adjustable-rate mortgage (ARM) means that the interest rate changes over the life of the loan, according to the terms that are specified ahead of time. If you’re working with a local 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. But 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 progresses.
Twenty-year fixed-rate mortgages allow you to make a consistent higher monthly payment throughout all of the 20 years you have the mortgage. The shorter term means you pay the loan off quicker and therefore pay less interest and build your equity faster than with a 30-year loan. The disadvantages of a fixed-rate mortgage include a possibly higher cost; these loans are usually priced higher than an adjustable-rate mortgage.
Your property taxes may be deductible so make sure to consult with your CPA or other tax advisor for the current tax information. Insiders know that the advertised mortgage rates are not always what you’ll get from the lender; it could be market fluctuations, economic news, any other of a dozen reasons, but interest rates can change throughout the day. If you’re having a problem getting a loan or home mortgage you might consider a lease-option on a property; a lease-option on the real property will allow you to set a good purchase price now, then apply a portion of the rent each month toward your down payment, building your equity in the process.
Work diligently with your mortgage broker or lender to develop an individual loan or mortgage program based on your credit worthiness. 15-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, for example, if you have plans to retire. There are plenty of options that are ideal for those people who have a few bad credit indications on their credit report.
The interest rate for an adjustable rate mortgage may be adjusted up or down at predetermined times which will make the monthly payment increase or decrease. If rates in the current market are high, you’ll probably get a better price with an adjustable-rate loan. Interest rates can go up if a rosy picture is painted indicating the economy is flourishing, for example more jobs being available; this can lead to inflation which will send the rates up.
If you’re a first-time home-buyer it’s possible that you may qualify for a lower down payment or a lower interest rate. You might want to check with mortgage brokers, online mortgage companies, your county housing department or your employer to see if they know of any programs available. A fixed-rate mortgage means the interest rate and principal payments remain the same for life of the loan but the taxes will probably change.
Make sure to get lots of advice about real estate financing, mortgages, interest rates, mortgage rates, mortgage refinance, bad credit mortgages, etc., and think about what makes sense to you. Thinking positive about real estate financing is important and so is being realistic. It is always good to know the truth about advertised current mortgage rates when you need real estate financing.