Caution Given Against Foreclosure Scams

If you ask any of the foreclosure experts, they will only say the same thing – foreclosure is actually unavoidable as long as you are equipped with the necessary information needed to make an informed decision. Although this unfortunate situation may be avoided, it will certainly mean a lot of effort on your part. Sadly, many troubled homeowners are led to believe that there is an easy way out of this financial mess.

For this reason, it is not surprising that the number of foreclosure – related scams has tripled over the last decade. As the national foreclosure rate climbed to record levels, more and more scam artists are taking advantage of these troubled borrowers.

Some of these scam artists will come to you in the guise of a foreclosure rescue company. They will provide you assistance in dealing with your lender and stopping foreclosure, in exchange for an upfront payment that ranges from a couple of hundred to thousands of dollars. Of course, once they receive the money, they will quickly disappear.

Not only will the homeowners still be facing foreclosure, but the money that could have been used to pay for the mortgage arrears, late penalties and other fees will also be lost forever.

Distressed homeowners should realize that help is actually offered by non-profit organizations, which have been formed for this purpose. Everything is for free and perhaps the only thing that you will have to pay for is the request for a credit report.

Both the federal government and state officials have grown concerned about these foreclosure rescue scams. They recommend that struggling homeowners go to HUD-approved foreclosure counseling centers in order to avoid the likelihood of being scammed by these unscrupulous individuals.

Always remember that stopping foreclosure is actually difficult and you should not believe any individual or company that tells you otherwise.

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George Royal

Bad credit loan mortgages or non-status mortgages are purposely intended to serve people with a bad credit history. According to a recent survey, one fifth of all adults are not able to qualify for a standard mortgage as a result of a previous or current bad financial situation.

Credit history is based on information retrieved from sources including Public records such as electoral roll information, court judgments and bankruptcies; and Information provided by financial institutions and other lenders such as banks that provide credit accounts and lending facilities.

In order to calculate the potential risk in providing loans to the person, most lenders use independent credit reference agencies to gather and assemble this information since they are permitted by law to review a mortgagee’s credit report before granting approval.

Bad credit rating usually results from failure to pay off outstanding debts or other credit payments on time, due to factors such as outstanding rent or mortgage arrears, county court judgments (CCJ) or bankruptcy. There are also other reasons that can result in a bad credit record which include:

1. Foreclosure

2. Heavy medical bills

3. Settlements arising due to Judgments /divorce

4. Multiple credit cards

5. IRS debt

Bad credit mortgage is designed for people who are unable to take out a mortgage from high-end mortgage providers. However, there are several providers who are willing to take a risk and provide loans for individuals with bad credit ratings, but at a higher rate or lower maximum amount.

Normally, a bad credit mortgage loan has an introductory interest rate that is fixed for 2-3 years, which is substantially higher that the rate pertaining to a conventional 30 year fixed rate loan. This is due to the extra risk the lender has to take, because with a bad credit, the borrower?s probability of default on the home load is higher than someone with good credit. However, after the initial period, the interest rate on a bad credit mortgage will adjust periodically.

There are also a few factors that most lenders of bad credit loan mortgages will look into, before granting the loan mortgage to people with bad credit history. This includes:

1. Employment history and income stability

2. Current monthly debt
3. Value of the property and
4. Down payment

Since loan requests from people with bad credit do not fit under the standard underwriting guidelines, fees charged by lenders on bad credit mortgage loans are also significantly higher than those charged in a conventional or standard home loan. This can range from 1% to 6% of the total loan amount.

Since individuals who get a bad credit mortgage usually do so mainly because they want to put their credit back into good standing, or as an opportunity to clean up credit history, the higher interest rate need not necessarily lasts for 30 years. Additionally, if the monthly loan payments are in time for two consecutive years, the bad credit mortgage can be refinanced with a conventional loan at a much lower interest rate.

Bad Credit HQ
http://badcredit-hq.com/
Helping you to get your finances back under control

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Laura Ecklund

Having trouble paying your bills? Getting calls from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or car?

You are not alone. Many people face a financial crisis some time in their lives. But often, it can be overcome. Your financial situation doesn?t have to go from bad to worse. An option is to consolidate or refinance the debt into a mortgage.

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of paying only one loan.

There are several reasons why you should consider refinancing your existing debt:

? Reduce the interest rate and/or convert from a floating rate to a fixed rate loan
? Reduce the monthly payment by extending the loan maturity

? Convert short term debt to long term debt
? Use the equity you built up in your fixed assets to provide cash
? Consolidate debt
? Get out of debt sooner

You may be able to lower your payments and reduce your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit.

To explain how you can use a second mortgage or home equity line of credit to diminish and control debt, we need to explain the two types of mortgage rates and how they can affect your ability to take out an additional loan or refinance.

There are many types of mortgage loans. The two basic types of loans are the fixed rate mortgage (FRM) and adjustable rate mortgage (ARM).

In a fixed rate mortgage, the interest rate, and hence the monthly payment, remains fixed for the life (or term) of the loan. This term is usually for 10, 15, 20, or 30 years. The only increase you might see in the monthly payments would result from an increase in property taxes or insurance rates (paid using an escrow account, if you’ve opted to use an escrow). But payments for principal and interest will be consistent throughout the life of the loan using an FRM.

In an adjustable rate mortgage, the interest rate is fixed for a period of time, after which it will periodically (annually or monthly) adjust up or down to some market index.

Adjustable rates transfer part of the interest rate risk from the lender to the borrower, and thus are widely used where unpredictable interest rates make fixed rate loans difficult to obtain. Since the risk is transferred, lenders will usually make the initial interest rate of the ARM’s note anywhere from 0.5% to 2% lower than the average 30-year fixed rate. Because these types of loans can have very low interest rates, they have been a popular option for people throughout the past few years when the interest rates have been at such low levels. In most scenarios, the savings from an ARM outweigh its risks, making them an attractive option for people who are planning to keep a mortgage for ten years or less.

Now that we have an understanding of the types of mortgage loans, we can discuss how to refinance your original mortgage to consolidate debt.

The amount one can borrow in refinancing from a second mortgage is determined by how much equity is in your home. Equity can be defined as the difference between how much the home is worth and how much you owe on the mortgage. Therefore, a home equity line of credit (known as a HELOC) is a loan that is taken against the equity in your home. The collateral on the loan is your house and, depending upon where you live, local lending laws will regulate how much you can borrow. One of the most popular uses of a home equity credit line is to consolidate high-interest credit card balances, and pay them off before the penalties, interest payments, and annual fees become an unmanageable burden. By using a home equity line of credit, it?s possible to pay off all credit cards, and replace them with a single, easy to manage loan. Another benefit of the home equity line of credit is that it can be paid off gradually, over a long period of time. A home equity line of credit can free you from debt, and help you improve your credit rating at the same time.

According to a recent study by the Consumer Bankers Association, about 36% of the home equity loans and home equity lines of credit taken out are used to refinance debt, making it easily the number one reason for taking out these types of loans.

So far we’ve mentioned two types of home-equity options: home-equity lines of credit and home-equity loans. There’s also a third option, known as cash-out refinancing. Each of these can be used for debt consolidation, and each has its pros and cons. Here’s a quick review.

These days, the hot loan is the home-equity line of credit, which works pretty much like a credit card. You’re given a maximum loan amount of, say, $20,000, which you can then run up or pay off as you choose. Lines of credit are directly tied to the prime rate. Typically you’ll pay the prime rate plus a small markup. (Introductory rates may be lower than that.) Usually there are minimal or no up-front costs to take out a HELOC, and the flexibility of these loans makes them desirable. It also makes them potentially risky for those who can’t have a line of credit open without maxing it.

A home-equity loan (known as an HEL), by contrast, works a lot like a mini fixed-rate mortgage. You get a lump sum, which you are then expected to pay back via regular monthly payments over a set amount of time. Rather than moving with the prime rate, these loans tend to track short- and midterm deposit costs. The current average home-equity-loan rate is 7.91% on a $30,000 loan, according to Bankrate.com.

A HEL can be handy for debt consolidation, since you know exactly how much you owe on your credit cards, and if you take out exactly that amount, you don’t run the risk of piling on more debt. Clearly, though, you’re not going to be doing yourself any favors if you spread out your debt over the next decade.

Finally, there’s the cash-out mortgage refinance. As the name implies, with this type of loan you refinance your mortgage, taking out an extra bit for yourself. (Right now the average rate for a 30-year fixed-rate mortgage is 5.8%, according to Bankrate.com.) This can be a great move, but since refinancing comes with its own costs, it’s worth considering only if you were already planning on refinancing anyway. Also, if you do decide to go this route, make sure you can pay ahead of schedule without getting hit with a penalty.

So how do you find the best rates? Thorough research, of course. Be sure to check both the big lenders and the little ones. You’ll often find that the best rates are offered by local banks, savings and loans and credit unions. Of course, as with any type of loan, the best rates are going to be doled out to the best customers with the highest credit score.

Many Americans have seen their houses skyrocket in value over the past few years, while their credit card debts mounted. New laws and policy changes have made equity lines of credit and second mortgages more appealing to the homeowner and have made it easier to consolidate the debt and live a financially more secure life. Why fall further into debt when a debt consolidation mortgage loan can provide much needed relief.

Laura is an experienced free-lance writer who focuses on home equity and debt consolidation loans. You can read more mortgage refinance articles at Nationwide Mortgage Loans. Please visit us online and get more information about second mortgages and debt consolidation loans.

? 2006 Copyright Nationwide Mortgages

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W. Troy Swezey

The first thing most of us think about when the time comes to take out a mortgage on a new home is the interest rate.

That?s both perfectly natural and very sensible. The rate of interest we pay can make an immense difference ? a difference amounting to tens of thousands of dollars ? in what the actual cost of our house ultimately turns out to be.

Still, interest rates are far from the only thing worth thinking about where mortgages are concerned. Other important variables need to be considered too. One is the question of whether to take a fixed interest rate of choose from among the many kinds of variable-rate mortgages that have been created over the years to meet the differing needs of different buyers.

Another ? and a very important one ? is the rather basic question of how long you want your mortgage to run. Even with fixed-rate mortgages, a broad spectrum of time spans is commonly available. In most cases the extremes are 15 years on the short side, 30 years on the long.

Some years ago, when a famous scientist was asked to name the most powerful force in the universe, he answered ?the power of compound interest.? This reply suggests that he was knowledgeable not only about the laws of nature but the principles of finance ? about what happens to even a modest sum of money when it continues to accumulate interest year after year after year.

Even at a modest rate of interest, money in a savings account can double within ten years or less. The amount actually paid for a house with a $100,000 mortgage can turn out to be several hundred thousand dollars if the mortgage runs for 30 years.

When you opt for a mortgage of only 15 or 20 yeas, on the other hand, you chop off much of the growth in your total obligation. But to do that without reducing the initial size of your mortgage, you have to make a bigger payment every month. As in most of life?s major decisions, the stakes are high and the trade-offs require careful consideration. Above all, they require a careful examination of your resources, your aspirations, and your personal priorities.

Someone who?s willing to make near-term lifestyle sacrifices for the sake of long-term gains probably will prefer a shorter mortgage. If your motto is ?eat, drink and be merry,? on the other hand, the idea of squeezing extra money out of your budget for the sake of a bigger house payment won?t have much appeal.

If you?re attracted by a shorter, faster mortgage and think you might be able to handle one, ask your real estate agent to show you just how much long-term savings such an approach can make possible. Chances are you?ll be astonished by the size of the number.

Remember, though, that a 15-year or 20-year mortgage, by increasing your monthly obligations now and for years to come, can sharply reduce your flexibility.

One good approach is to take a 30-year mortgage but try to discipline yourself to make one extra monthly payment each year. If you can stick to such a regimen, ultimately it will yield the benefits of a 15-year mortgage. Meanwhile, you?ll be less strapped if changing circumstances reduce your ability to make monthly payments.

What?s really important is making yourself aware of how many different options you have and gathering detailed information about the ones that interest you most. A good real estate broker can be your key to all the information you could possibly need.

About The Author

W. Troy Swezey is the author of ?HOW LONG YOUR MORTGAGE RUNS DETERMINES HOW MUCH YOU PAY.” As a Realtor at Century 21 Paul & Associates, he has helped many individuals with their real estate needs. Visit his web site to download his free e-book, ?REAL ESTATE SECRETS EXPOSED.? http://www.TroyIsMyRealtor.com or mail to: TroyC21@usa.net

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Jessica Elliott

Maybe you?re buying your first home in Texas, or perhaps you?re relocating to Texas from another state. Either way, it?s important that you educate yourself on Texas home loans before shopping for a home and mortgage. This article explains what you?ll need to know before buying a home in Texas:

The median price of a home in Texas is $82,500. Recently, homes in Texas have been appreciating at rates well below the national average. Additionally, average interest rates in Texas are above the national average. However, the rate of job growth in Texas is comparable to the national average.

The price of homes in Texas varies widely between zip codes. For example, in Dallas, Texas, the median price of a home in the summer of 2005 was $261,000; however, in San Antonio, Texas, the median price of a home was $220,000, and in Houston, Texas, it was $151,000.

Home equity lines of credit are prohibited in Texas. Additionally, cash-out refinances are not permitted on primary residences. When a homeowner is refinancing their mortgage, Texas law states that the rates and terms of refinancing may only include the payoff amount of the old loan plus points, penalties, and any necessary and reasonable closing costs. The total amount of all closing costs may not exceed 3% of the loan amount.

The Texas State Affordable Housing Corporation provides housing programs for first-time homebuyers that are educators, police officers, or firefighters. These programs aid in the home buying process by providing qualified buyers with down payment assistance grants. Additionally, there are also programs for low income families. These programs offer down payment assistance grants and interest rate reductions for borrowers who make timely monthly payments for a certain period of time.

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Martin Nolan

During the 1980?s and 90?s a new concept of property mortgaging arrived in the UK. Endowment mortgages became extremely popular with homebuyers who wanted a secure but affordable method of repaying their mortgage debt. Most large financial organisations were happy to offer these products and they were sold by large banks, building societies and high street brokers.

The general concept of an endowment mortgage was that the customer would make regular installments into an investment fund managed by the endowment provider (the big financial organisations). The investment would eventually generate enough money to pay off the mortgage debt in full and usually the customer would be left with an extra amount or bonus at the end. In addition to this the customer would also have the benefit of life insurance for the duration of the investment period with cover provided up to the value of the endowment maturity value. The overall financial package of a combined insurance and savings product linked to lower mortgage payments, was almost too good to be true.
As a result there are currently around ten million active endowment policies in the UK.

Like most things that seem too good to be true, endowment mortgage policies have sadly proven to be extremely disappointing for the vast majority of customers. These investment products are closely linked to the worlds stock markets but with the recent 5 year global recession and sharp downturn experienced by most countries, the anticipated return on investment is proving to be far less than the endowment providers anticipated.

It is estimated that 80% of all existing endowment products will fail to meet the projected target amount and some will have considerable shortfalls. This means that potentially as many as 8 million people in the UK will fail to reap any bonuses from their plans but worst of all may completely fail to pay off their mortgage debt by the time their plan matures.

It was not long before the consumer groups began asking serious questions about the credibility of endowment policies and the regulatory body in the UK Financial Services Authority (FSA) was forced to act following complaints about widespread misselling.

It has since become apparent that millions of endowment policies were mis-sold in that the individuals or organisations conducting the sale, failed to follow the rules and notify the customer of certain key features relating to the advantages and disadvantages of the endowment products. Far too much emphasis was placed on the benefits of the products with little or no discussion about the risks involved with potentially erratic investments that were linked to the stock market. The message was that the plan simply could not fail and this was a flawed and misleading sales pitch.

The FSA have devised a scheme that allows endowment policyholders to make a formal complaint about possible misselling. The rules allow for such a complaint to be made once a ?warning? letter has been received from the endowment provider indicating that the plan will more than likely fail to meet the projected target amount (this is known as a policy shortfall). If the complaint is upheld, the endowment provider or the salesman / selling organization must make an offer of compensation to the customer. The average compensation award is thought to be in the region of ?5000.
Whilst it is possible for customers to complain personally, the FSA process is regrettably complex and many customers will need assistance from ?professional claims handlers? in order to pursue their complaint effectively. Many endowment providers corrupt the process by using technical jargon and complex rules. They have also introduced ?Time barring? arguments which have been allowed by the FSA. The rule here is that you have generally three years from the date of your first warning letter to make your complaint. This serves to confuse customers and many complaints that are pursued direct without professional assistance will simply fail. The majority of customers do not even bother to complain because of the complexities involved.

Summary:
Thanks to consumer groups and professional claims handling bodies the UK?s endowment misselling scandal is gathering a head of steam and victims are now more aware of the issues.

The important aspects for customers to remember are:

? You only have a limited amount of time to complain ? 3 years from the date of your first letter from the endowment provider warning about a possible shortfall.

? You must complain now to ensure that any shortfall in the projected target value of your policy is recouped. You may not recover the full shortfall amount but your compensation will go some way to bridging the gap.

? You must also seek financial advice on your mortgage situation because if a shortfall has been highlighted, the endowment plan you have is NOT going to meet your mortgage debt on maturity

If you currently have an endowment mortgage policy you must act now to ensure that you and your family?s future remains secure. Be aware of the issues, be aware of the need to correct the misselling that you have been the victim of and most importantly be aware that only YOU can change the position that you now find yourself in.

For more information on making endowment compensation claims contact The Claims Connection managed by Winston Solicitors a regulated UK law firm.

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Jessica Elliott

Maybe you are buying your first home in Massachusetts, or perhaps you?re relocating to Massachusetts from another state. Either way, it?s important that you educate yourself on Massachusetts home loans before shopping for a home and mortgage. This article explains what you?ll need to know before buying a home in Massachusetts:

The median price of a home in Massachusetts is $185,700. Recently, homes in Massachusetts have been appreciating at rates below the national average. However, in some parts of Massachusetts, homes appreciate faster than incomes rise. As a result, income levels in many parts of Massachusetts are too low to purchase a median-priced home with a conventional loan.

The price of homes in Massachusetts varies widely between zip codes. For example, in Marion, Massachusetts, the median price of a home in the summer of 2005 was $700,000; however, in Rochester, Massachusetts, the median price of a home was $450,000, and in Acushnet, Massachusetts, it was $350,000. Average interest rates in Pennsylvania are below the national average.

Massachusetts law prohibits the issuance of balloon laws. Additionally, Massachusetts law requires that homes with individual sewage disposal systems must be inspected by a state-approved inspector, and all necessary repairs must be completed prior to loan closing.

Jessica Elliott recommends that you visit
Mortgage Lenders Plus.com for more information about
Massachusetts Mortgage Rates and Loans.

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Jay Moncliff

Do you want a rewarding career that will make some descent money? Are you good with numbers? Are you good with paperwork? Do you like anything that has to do with money? If you answered yes, you may be interested in a career in mortgage banking. The best place to get an education on mortgage banking is at The American School of Mortgage Banking. They guarantee success to all of there students.

The American School of Mortgage Banking can teach you all there is to know about mortgage banking. They have several courses that teach you all aspects of mortgage banking. The American School of Mortgage Banking offers a variety of courses at varying times. Some are as short as a few hours, and some are as long as a few days. Upon completion of their courses, The American School of Mortgage Banking also offers job placement and job assistance for as long as you need it. They will also write you a letter of recommendation for future possible employers. Lastly, you are offered free re-attendance to any courses you have completed, for those of you who would like a refresher to any courses you have completed

One of the first mortgage banking courses you should take is in loan origination and loan processing. The first part of this course is an introduction to mortgage banking. It then moves to how to figure the total loan amount and loan payment. Next is buyer approval and qualifications. Finally, this course goes over the different types of loans available and how to do the paper work for them. At the end of the course you will receive a loan origination and loan processing certificate of completion.

The next mortgage banking course you should take is conventional underwriting. This mortgage banking course will teach you the art of underwriting a conventional loan, appraisals, loan approval, liabilities, loan approval amount based on income, and the figuring of a down payment. Upon completion of this course you will receive a conventional underwriting certificate of completion.

Another similar mortgage banking course you should take is FHA underwriting. This mortgage banking course teaches you how to get a HUD loan approval, appraisals, insurance requirements, and FHA loan closing procedures. At the end of the course, you will get an FHA underwriting certificate of completion.

The American School of Mortgage Banking offers so much to its students. They guarantee that upon completion of there courses you will be ready to get out into the work force and join other mortgage bankers. You will leave knowing that you are going to be successful and you will also have a great deal of knowledge to take with you.

Jay Moncliff is the founder of http://www.1stonlinebanking.info a blog focusing on the Banking, resources and articles. This site provides detailed information on Banking. For more info visit his site: Banking

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Joseph Kocsis

Problem Remortgages

Research has indicated that as many as 1 in 4 people have had an adverse credit history problem in the past. Debt reports in national newspapers indicate that debt problems are spiralling out of control and it has become easier now than ever before to take out more debt by applying for loans, credit cards and mortgages. This was all well and good whilst interest rates were low and it was just above the UK retail prices index level (RPI) and it did not make sense to try to save as it was cheaper to borrow now and buy now. But this cannot carry on indefinitely and as interest rates rise, as they will, the debt will bite into peoples circumstances even harder.

If you are having trouble paying your current mortgage, loan or credit cards or you think that you are not receiving the best mortgage deal you possibly can, then perhaps it is time to think about a remortgage. However, many people are unsure about the relative benefits and problems of a remortgage. Here are some useful tips to help you decide if remortgaging is right for you:

What is a remortgage anyway?
A remortgage is when you replace your existing mortgage loan with a new one from either the same lender or a new lender. This is usually done to reduce monthly payments or to release equity. Remortgaging is usually carried out through a remortgage broker to find the best rates.

Remortgaging for lower payments
One of the most common reasons to re-mortgage is to get lower monthly payments than you do now. If you are struggling to pay off your monthly payments, then you need to look for a better deal, as soon as you can. If you can find one, then ask your current mortgage lender if they can match this, if they would prefer to keep you as a customer at a lower rate than lose you altogether. If they cannot match the rate, then you should look at remortgaging.

Remortgaging to release equity
Another reason why people remortgage is to get hold of some extra money by releasing equity they may have built up in their property. This means that you borrow more than your current mortgage debt to release the money you have already paid into the property and this extra money may be used for debt consolidation or home improvements. This is especially useful if your property has gone up in price or if you have paid off a large percentage of your mortgage. It is like getting out a loan, but the rates are low as they are part of the remortgage.

Pitfalls
One thing that you should look at before remortgaging is whether or not it is really right for you. There maybe a number of costs involved, such as legal fees and penalties for changing mortgages. These fees could add up and might be more than you can afford. Also, if you borrow more money or you get lower monthly payments, it could mean that you will be paying the money back for a longer period of time.

Although it may seem helpful now, you could end up paying more long-term and if you are still paying the money back when you retired you might be left unable to make the payments without pension provisions.

Remortgaging can help you if you are struggling with payments or you need to free up some money. However, you should think carefully about whether or not remortgaging will be beneficial to you in the long-term but if you have a problem remortgage it could be the ideal situation.

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Brandon Cornett

Adjustable rate mortgages, rather than fixed-rate mortgages, may be confusing for many homebuyers who are not familiar with them. It is always a good idea for a homebuyer to have all the information needed to make an informed decision.

The adjustable rate mortgage (ARM) is popular with home buyers looking for a lower interest rate for the first few years of ownership. Why are they popular? Simply put, they are structured to help people have lower payments for the initial period of the loan (the fixed-rate portion of the loan).

How an ARM Works
The overwhelming majority of adjustable rate mortgages are 30-year mortgages. For the ?ARM? portion of the mortgage, you pay a fixed interest rate. This initial period is usually 3, 5 or 7 years, but can vary based on the lender.

For the first 3, 5 or 7 years (or whatever the term is) you will have a defined interest rate and you will know what your payments are each month. This is the key principle of the ARM loan — a lower interest rate for the initial period (lower than what a 30-year fixed rate mortgage would be). This helps many first-time home buyers purchase a home in the first place.

When the ARM Adjusts
After the ARM period ends, the loan becomes an adjustable rate. A formula (defined by your lender) will then be used to determine your interest rate for that year. It will be based on the prime rate at the time of adjustment, which you never know in advance.

Refinancing Prior to Adjustment
Home owners concerned with rising interest rates can refinance their loan prior to the ARM period expiring. This converts the adjustable rate mortgage into a fixed-rate mortgage.

Other ARM Considerations
When considering an adjustable rate mortgage, you will want to pay careful attention to the fixed-rate portion of the loan. Also find out what, if any, caps there are on the adjustable rate portion of the loan. Ask your loan officer those questions so you can make an educated decision.

Some home buyers like ARM loans because they are expecting an increase in income over the next 3 to 5 years so they know they can afford a higher interest rate at that time, and they are comfortable taking out this type of loan. Other home buyers like ARM loans because they do not intend to live in the home beyond the period of the fixed-rate portion of the loan, so they benefit from the lower interest rates up front without the uncertainty of the adjustable period.

As you consider adjustable rate mortgages and fixed rate mortgages, you should ask your loan officer to show you amortization schedules. These schedules show how much your payments will be and how much of the payment goes towards interest and how much toward the loan’s principle.

Every lender has different nuances with their fixed rate mortgages. Make sure there are no pre-payment penalties — if there are, you need to factor that into your overall thinking about which type of loan is better for you.

An informed consumer is a smart consumer. Doing your homework in advance will help you understand the mortgages and thus make the right financial decision.

* Copyright 2006, Brandon Cornett. You may republish this article if you keep the byline and author’s note, and also leave the hyperlinks active.

Learn more!
You can learn more about mortgage loans by visiting HomeBuyingInstitute.com, the Internet’s largest library of home buying and mortgage advice. Increase your home buying intelligence at: http://www.homebuyinginstitute.com

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