Home Ownership 101: Things you Should Know about Home Loans

1. 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 congratulate you! 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

2. 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!