A Bit About Mortgages

By: Karrie Rose

The reality of buying a home is this: you will likely need a mortgage. There are those people out there who have the ability to pay cash for a home but that is by far, the minority. Homes are more expensive now than ever before, partly due to the rise in building costs and the increased demand for homes in this country. Along with this increased demand has come every flavor of lending from the traditional mortgage to shady loans that have left home owners floundering. When buying a home it makes simple sense to investigate your mortgage and lender to ensure that you are getting the the best loan possible and are not getting taken for a ride.

The traditional home loan is what's referred to as a fixed rate mortgage. These loans are usually amortized over a fixed period of time, say 30 years. They also have an interest rate that is attached to them that dictates the fees and money that you have to pay in order to borrow the principal amount. Fixed rate mortgages are by far the best way to finance over a long period of time as the fixed rate ensures that your monthly payments will be the same over the period of the loan. This allows a borrower to figure out a monthly budget based on their regular fixed payments and gives a strong base to any financial planning.

Variable rate mortgages work very well when the interest rates are low, however they can change over the course of time. Interest rates fluctuate and if they happen to take a steep climb, you can very easily see your monthly payments increased to a level where the payments become uncomfortable or even unachievable. These loans are very attractive in the right market but if the market changes as they are wont to do you could find yourself in a financial fix.

Then of course there are the fly-by-night lenders. The first step that you take in securing a mortgage should be to compare quotes from many different sources and then once you have narrowed it down, investigate the lenders. It is critical to find a lender that has a good reputation and business track record. If you research a lender and they have only been in business for a year or two you may not want to commit to them. this country has seen no shortage of mortgage scams and the last thing you want to do is find yourself the victim of an unscrupulous lender. Take the time to research every aspect of the lender and the loan and then make your decision based on solid facts.

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