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