Understanding Home Loans
You're reading Understanding Home Loans, posted on Wednesday, February 21st, 2007 at 7:55 pm in Home Loans, on BrainBloggers at the Get The Loan You Need blog. More after the jump.
With the way things are these days more and more people are finding that they need to secure a loan to get the things they want, especially when it comes to housing. Trying to buy a home is not an easy thing to do and it requires taking out a loan, which can be tedious and nerve wracking. That is why it is always important to understand what you are getting yourself into before you take the giant leap.
One of the advantages of working with an exclusive buyer’s agent is that the agent has a legal duty to help you find a mortgage loan with the best rates and condition for your particular home buying situation at the time. Exclusive buyer agents seek out and cultivate relationships with mortgage brokers and lenders with the best rates and terms in the marketplace. That way they can find the best for you.
Two agencies assist lenders as resources for home mortgage loans, the Federal Home Mortgage Lending Corporation (FHMLC) and the Federal National Mortgage Association (FNMA) commonly referred to as FreddieMac and Fannie Mae. Whether the lender source is a bank, credit union, savings and loan institution, or mortgage bank, these agencies only purchase mortgages that conform to their guidelines.
The basic principles of mortgage lending for understanding home loans are based on the following information:
1. Credit score of borrower which provides historical evidence of his willingness and ability to pay his financial obligations.
2. An analysis of the borrower’s ability to repay the mortgage based on the monthly payment, including property taxes and insurance on the property, plus existing monthly bills in comparison to existing and projected monthly income.
3. A review of the borrower’s liquid finances of the most recent sixty days from the time of application.
4. An independent appraisal of the property conducted in accordance with Fannie Mae and Freddie Mac guidelines.
When it comes to home mortgage loans, one size does not fit all, so a government loan may sometimes be a better choice. FHA, VA, and FmHA mortgages offer some benefits not seen in conventional financing no money down or small cash layout, lower interest rates, long loan terms, and no prepayment penalties. But these loans which are targeted for specific types of home buyers take longer to obtain and may have low maximum mortgage amounts for your marketplace.
So remember it is always important to have an experienced professional counseling you and having someone who will help you identify the right kind of ‘mortgage product’ for your needs and to get a best rate and terms on your home mortgage.