Being a homeowner means having a place which you can call your own. However, there’s just one small problem - your funds and your wishes aren’t in alignment. You will, probably, need a home loan to help you get started on your journey to homeownership.
Home Ownership 101: Things you
Should Know about Home Loans
Are you tired of apartment living and feel like you are ready to buy your first home? We
Apartment living has its perks, like some of the better amenities, but it also comes with its
hassles as well. Think thin walls, loud upstairs neighbors, and horrible parking, to name a few.
Being a homeowner means having a place which you can call your own. You can decorate the
rooms of your house the way you want, have barbecues during the summer, and enjoy the
sweet privacy, which is possible only when you are at your own home.
However, there’s just one small problem - your funds and your wishes aren’t in alignment. You
will, probably, need a home loan to help you get started on your journey to homeownership.
But, before starting the panic, there’s also
good news coming. If you try just a fast
internet search you will see many results
showing you various notices about the home
loans or mortgages, e.g. the tax advantages
to be had, the amount of money you will have
to put aside and save, the monthly payment
you should expect, even about the mortgages
and what you can do when you are late on
your mortgage and when foreclosure seems
to be the only possible end. However, it is not:
you can prevent foreclosure by contacting the
foreclosure preventing companies, which will
be able to help you save your home.
And perhaps this advantage has its downside as well i.e. there’s so much information out there
on home loans, it’s hard to sift through the clutter to find the exact information you need at the
actual situation. To help you make the best decision for your needs, you will have to gain a
basic understanding of the various home loan options available for you to choose from.
Types of Loans
When you are interested in becoming a homeowner, getting the right home loan is just as
important as finding the right home. After all, you will have to make this payment for the
foreseeable future. Like a marriage, for better or worse, the type of loan you choose will
influence your financial future.
There are four main types of mortgages and each one has its own advantages and
disadvantages. They are:
●Jumbo: These loans are for those financing homes that are above conventional loan
limits. For instance, if you wanted to finance a million dollar home, this would be the best
option for you. But, it's important to note that because of the large amounts of money
involved, these loans have special credit requirements and restrictions that you will have
to meet to qualify.
●VA: These loans are brought to you by the Department of Veteran Affairs and require
little to no down payment. However, they are only available to armed forces veterans
who meet their qualifications.
●FHA: These loans are courtesy of the
Federal Housing Administration and allow
you put as little as 3% down - if you and the
property you are interested in qualify for the
loan that is. This loan is mainly useful for
people who are unable to do a down
payment, because of the lack of the money.
Those people, however, are ready for
monthly payments and can do those
payments easily. However, the one matter
here is that by having a down payment less
than 20%, you will have to pay private
mortgage insurance every month. Your
monthly PMI payment is used for security
purposes in case you default on your loan.
●Conventional mortgages: These loans require that you put down at least 20% down
and won’t require you to pay private mortgage insurance. This is really a great variant,
especially for those who have the needed amount of money saved and are ready for
down payment and closing costs.
The Bottom Line
You know that owning your own property is one of the best things in the world. After all, a man's
(or woman's) home is his/her castle. However, sometimes the road leading us to the
homeownership isn’t necessarily an easy and careless one. In this case, if you are doing all
your responsibilities properly, you will be sure to get a satisfying result. This will ensure that you
have the information in your arsenal for you to make an informed decision that will positively
affect your financial and personal future. Happy House Hunting!