| For instance, you are quite tired of renting | | | | The interest rates applicable on a home |
| apartment units. It is been a long time since | | | | mortgage loan may vary according to the loan |
| you have been renting (probably when you | | | | term and the principal amount. There are two |
| have started your first work several years | | | | types of interest rates applied on home |
| ago) and you estimated that you have already | | | | mortgage loans. These are the following: |
| spent an amount sufficient to purchase a | | | | |
| modest and permanent home. At this point in | | | | 1) Fixed rate mortgage (FRM) as the name |
| time, you realized that it is now the moment | | | | suggests, the interest rate is fixed, hence |
| to shop for a home that you want to stay in. | | | | the monthly repayment for the term of the |
| However, you are hindered by lack of | | | | home mortgage loan. In the United States, the |
| financial funds that you can use on financing | | | | home mortgage loan term where the FRM is |
| the purchase of your new home. There is no | | | | applicable is typically for 10, 15, 20, or 30 |
| chance that a real estate agent will provide | | | | years. The only increase that you can expect |
| you the necessary documentations saying that | | | | in your monthly repayments is the result of |
| you are now the new owner if you do not have | | | | increase on property taxes and insurance |
| enough funds. | | | | rates. But the interest rate and the basic |
| | | | monthly repayment amounts will be consistent |
| Will you still go back to being a tenant | | | | throughout the term of the home mortgage |
| until you retire from your present work? | | | | loan. |
| | | | |
| What if there is an alternative that you can | | | | 2) Adjustable rate mortgage (ARM) the |
| resort to in this case? Are you willing to | | | | interest period is initially fixed for a |
| give it a try or you will just turn your back | | | | certain period of time. After which, it will |
| on this opportunity of owning a new home | | | | now be subjected on changes (either adjust up |
| without the need of paying the full value | | | | or down) based on various market indexes. In |
| immediately? | | | | the United States, the most common indices |
| | | | used in determining ARM are the Prime Rate |
| Yes, there is still a way! And it is through | | | | and Treasure Index. Home mortgage loans |
| securing a home mortgage loan. | | | | having this type of interest rate transfers |
| | | | the risk from the mortgage lender to the |
| Home mortgage loans are popular financing | | | | borrower. |
| schemes in purchasing a new home. Arranging | | | | |
| mortgage loans are seen as the standard | | | | The mortgage lender determines whether an |
| method of buying residential properties | | | | applicant is eligible for the home mortgage |
| without the need of paying the full value | | | | loan he selected based on different factors, |
| immediately. Under typical home mortgage | | | | but the most popular is the applicant's |
| loans conditions, your mortgage lender will | | | | credit scores. The higher your credit score, |
| pay the owner or developer of the home of | | | | the more creditworthy you are to your lender, |
| your choice, and you will make monthly | | | | which could lead to cost-efficient home |
| repayments of the amount your lender spent on | | | | mortgage loans. |
| purchasing the home from the owner or | | | | |
| developer. The term of the mortgage loan is | | | | With home mortgage loans, you will be able to |
| dependent on what you will agree with the | | | | realize your ultimate dream of becoming a new |
| lender. | | | | homeowner and not just a tenant forever. |
| | | | |