The Dream of many people is to have the ability and the opportunity to own their own home. Just a few decades back, that reality was not too hard to grasp. Home values fell in the range of many average incomes. It was possible – and likely – that if a mortgage was required then it would be paid off in just a few short years.
Home prices have increased dramatically and along with the rising prices have come larger homes. More space, more money has required more people to look to loans for the purchase power required to move into their own home. The good news is that there are now more programs than ever to help you in your quest to own a home.
Variable Rate Interests – this is a rate that will change over the life of the loan. In the current market is it likely that the rates will climb. Variable rate interests are typically lower than Fixed Rates because the bank expects to make it up over time.
Interest Only Loans – You can get much lower monthly payments with these loans because you are only paying the interest. At the end of the term you will still owe the same amount that you borrowed.
Loan to Value Ratio – This is the amount you are borrowing compared to the appraised value of the property. The less percentage of the value you are borrowing then the better rate you are likely to be able to negotiate.
Down Payment – The amount of cash you are able to pay on the home when you are ready to purchase it. The down payment is one way to better the Loan to Value percentage.
Origination Fee – This is the amount that your lender is going to charge for getting you the loan. Most people roll this (and other closing costs) into the loan. The origination fee is usually around 1% of the value of the loan.