Getting a Home Mortgage

So, you're interested to get a mortgage for your dream house. In order to do

this, there are some steps you need to get the right Home Mortgage for you.

The initial step is to order your credit report from the country's three major

credit reporting agencies which are Equifax, TransUnion and Experian. Your

credit report is very important in your Home Mortgage because this determines

your ability to pay off the Home Mortgage you are applying for. Your credit

report reflects how up to date you are on paying your credits, your outstanding

balance and the amount of money you still owe. A good standing on your credit

report assures the lenders that their risk in investing with you will assure

them that they will get their money back and assures you that your home

mortgage loan gets approval.

In relation to this, financial experts recommend that it is wise for you to

check the credit reports once you have them for errors before submitting these

to lenders. The reason for this is that, these errors can cost you thousands of

dollars more in interest or it could deny you the Home Mortgage you are

applying for.

The second step in taking a Home Mortgage is to know the current Home Mortgage

rates. Mortgage rates fluctuate and looking at certain economic key indicators

such as bonds and Treasury notes can help you decide if it feasible to go for a

Home Mortgage now and can help you get interest savings.

The third step in taking a Home Mortgage is to decide which mortgage program is

best for you. There are so many kinds of programs and loans that are available.

These include government loans and non-governmental loans called conventional

loans. It is best to be educated and knowledgeable about all these home

mortgage options in order to get the best for your situation. Some things that

you need to consider when you're in this stage are:

- the amount of money you have for down payment for your Home Mortgage

- the amount of monthly payment on your Home Mortgage you can afford without

worry and with security

- the number of years you plan to stay on the house or with the Home Mortgage

- the importance of paying off the Home Mortgage early

- the ability and an objective to give extra principal payments and,

- your projection of your income's stability or its possibility to increase in

order for you not to have difficulties in paying off your Home Mortgage in the

future.

These should all be considered because remember, a Home Mortgage is a long

period investment and requires huge amounts of money.

The fourth step is to check and compare interest rates among the various

lenders. This is the most difficult part but this is where you can usually save

off in interests when you are already in the middle of a Home Mortgage program.

Be wary also of terms that different lending companies use that may be pointing

to the same thing. Other companies might waive off some fees and then add

another one, which might cost you more. Take time to know all the figures

behind the names they use for the fees that they give.

The fifth step is to look at the whole Home Mortgage package. Aside from

interests, you need to consider other factors in the package such as the type

of mortgage, the type of down payment, the presence of prepayment penalties,

lock-in period, mortgage insurance, payment schedule, and other features.

And lastly, when you have decided on the lender for your Home Mortgage,

determine the required documents for your loan. These typically include a

completely filled up Uniform Residential Loan Application and your credit

report fee. Fees are usually collected when submitting a Home Mortgage

applications. Some of which are application fee and appraisal fee. Other

requirements and fees needed to be paid for your Home Mortgage application may

vary from one lending institution to another.

The Basics of Mortgage

Let's face it, not everyone has enough money on his bank account to buy a house. If you are an average American, chances are you need a mortgage loan.

There are many types of mortgages and these can be classified into 2 categories. These are conventional and governmental loans. Mortgage from both categories can be further categorized as fixed rate loans, adjustable rate loans and different hybrids or combinations from these mortgage loans.

The US government provides mortgages which can be found from three government departments. These are the US Department of Veterans Affairs (VA), US Department of Housing and Urban Development (HUD) and The Rural Housing Service (RHS) of the U.S. Dept. of Agriculture. Aside from these, other mortgage plans for low cost to moderate housing plans are also available in different cities, states and counties. Most of these provide fixed rate mortgages and low interest rates.

Mortgage plans that are not included among these are under conventional mortgages. There are 2 kinds of mortgage under this category. These are conforming mortgage loans and non-conforming mortgage loans. Conforming mortgage loans follow the guidelines and conditions that were set up by 2 stock-holder owned corporations: Fannie Mae and Freddie Mac. These two companies purchase mortgage loans from lending institutions and package these into securities that are then sold to investors.

Both organizations set guidelines on down payments, suitable properties, loan amounts, borrower credit and income requirements on mortgages. And every year, loan limits for persons applying for their first mortgage are made known. To see their tables for loan limits, interest rates, and other information, visit the Fannie Mae (www.fanniemae.com) and Freddie Mac(www.freddiemac.com) websites.

There are also other mortgage loans available in the market. These non-conforming loans include: Jumbo loans and B/C loans. Jumbo mortgage loans are those that are above the maximum loan established by Freddie Mac and Fannie Mae. It is a kind of mortgage that has a higher interest than conforming loans because loans are acquired and bought in lower degree.

B/C mortgage loans, on the other hand, refer to plans that are offered to persons who have borrowed mortgage loans earlier but have filed for foreclosure and bankruptcy. This is also for borrowers who have had a record of late payments.

As mentioned earlier, conventional and governmental mortgages can be classified into fixed rate mortgages and adjustable mortgage. From the term "fixed rate", fixed rate mortgage loans are those whose monthly payments remain fixed over the period of the loan. There are so many kinds of these ranging from 10 - 30 years but the more popular terms for mortgage are 15 and 30. You should note that a shorter mortgage period assures you a smaller interest to pay.

If you want to avail of mortgage loans where monthly payments can change periodically, then you could choose a plan under adjustable rate mortgages. The interest in this type of mortgage loan changes depending on the type of index made to the interest rate. Some of these indexes include Constant Maturity Treasury (CMT), Prime Rate, Certificate of Deposit Index (CODI) , 12-Month Treasury Average (MTA), Cost of Savings Index (COSI), Certificates of Deposit (CD) Indexes, Treasury Bill (T-Bill), 11th District Cost of Funds Index (COFI), London Inter Bank Offering Rates (LIBOR) and Fannie Mae's Required Net Yield (RNY)

The Internet is a rich source for information on mortgage and so many companies offer online resources and services for those who want to avail of these loans. But before choosing the right type of mortgage there are some considerations you have to think about such that your mortgage plans will work out with your financial objectives. These are:

-The amount you can pay monthly for the mortgage

-How much you can pay for down payment

-How long you plan staying on the house

-Consider if you plan to make extra principal payments

-And since mortgages take over long periods of time to cover, it is also important that you consider the stability of your income.