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