Buying a home is a big step. In fact, it's the most
expensive purchase that most people will ever make. Unless
you are fortunate enough to be able to pay cash for your
new abode, you will soon become familiar with home loan
lenders, mortgage loan interest rates and all of the
necessary paperwork that is required to get your home loan
approved. A mortgage loan, also known as a home loan, can
be a lengthy process. If you want to minimize your time
spent working with home loan lenders and start enjoying
your home faster, it's the perfect time to learn everything
that you can about mortgage loans.
When most people purchase a new home, they either plan to
live in it for many years or are purchasing it with the
thought of later cashing in on the equity if the property
value increases. In deciding which kind of home loan to
apply for, you must first decide how long you plan to live
in the home. A fixed rate mortgage loan is a popular
choice among those who plan to live in a home for 10 years
or more. As the name implies, this type of home loan
offers the buyer a fixed rate over the entire life of the
loan, which means the interest rate will never change.
An adjustable rate mortgage (ARM) is one in which the
interest adjusts according to the current market rates.
This type of home loan is popular for those who plan to
sell in several years in order to cash in on rising
property values. Interest-only loans, on the other hand,
allow potential home buyers to make payments toward the
loan's interest for a specified amount of time.
In determining your eligibility for a mortgage loan, your
credit report will be accessed so that the home loan lender
can evaluate your creditworthiness. Today, the average
American's credit score is under 700, but even those with
lower scores can be approved for a mortgage loan. The
truth is that you don't have to have excellent credit to
obtain a home loan. In fact, more home loan lenders are
granting bad credit loans to those who currently have the
ability to repay or have shown improvement in their credit
report. Even if you have a bankruptcy on your credit
report, most home loan lenders will begin to consider your
application after two years.
Before applying for a mortgage loan, it is recommended that
you check your credit reports from each of the three major
reporting bureaus, including TransUnion, Equifax and
Experian. Inspect each entry carefully and make sure that
all notations, including account numbers, balance, payment
history and contact information are correct. If anything
needs correction, file a dispute with the credit reporting
agency and await their reply. When you apply for a home
loan, your eligibility and interest rates will be
determined by the information contained in your credit
report, which is why it should be completely accurate when
you are ready to submit a loan application.
If you are considering a home equity loan based on your
property's current value, there are a number of home loan
lenders who are more than willing to accept an application.
The amount granted for a home equity loan will greatly
depend on your home's equity, but it will also depend on
your ability to repay the debt. Most home loan lenders
offer a free qualification process that will give you a
good idea as to how much, if any, you can borrow against
the current equity in your home.
The information contained in this article is designed to be
used for reference purposes only. It should not be used
as, in place of or in conjunction with professional
financial advice relating to mortgage loans, home loan
lenders, bad credit loans or the lending process as a
whole. For additional information, consult with a lender
who specializes in these types of loans.
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Andrew Daigle is an author and creator of many
informational websites including
http://www.personal-payday-student-loans.com for different
types of loans and
http://www.auto-insurance-quotes-cheap.com for the cheapest
auto insurance, and many more.
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