Home Mortgage Loans

Mortgage Costs | Mortgage Types | Reverse Mortgages

Home mortgages, structured as fixed or adjustable interest rate loans, are available from thrift institutions, commercial banks, mortgage companies and credit unions.  Different mortgage rates may be available from various lenders, so you should shop around and get quotes from several lenders to ensure that you're getting a competitive rate.  You can also obtain a loan through a mortgage broker who has access to multiple lenders offering a wide selection of loan products and terms.  Mortgage brokers usually charge a fee for their services.  Some financial institutions function as both lenders and brokers; be sure you understand what fees and closing costs are involved with each mortgage quote you receive.

So, how do the various mortgage loan types differ?  Fixed rate mortgages have higher interest rates, but both the interest rate and the monthly payment remain the same for the life of the loan.  Interest rates on adjustable rate mortgages change according to a standardized index.  With graduated payment loans, loan payments start small and then increase over the life of the loan.

Some older Americans are turning to a product called "reverse" mortgages in order to help them pay for medical care, supplement their income, or contribute to long-term health funds.  These mortgages allow homeowners to take out the equity in their home but still retain ownership of their home until they sell their home, move, or die.

In most cases, home mortgage loans can be refinanced without prepayment penalties, to take advantage of lower interest rates.  If your home's market value has increased, you may be able to utilize additional equity in your home when you refinance.

How do you choose a lender that works well for you?  Essentially, if you already have a good relationship with a bank, you might want to apply for a loan from that lending institution.  In many cases, friends or family members might recommend a lender they had a good experience with.  In some cases, your real estate agent or contractor may know of someone with an excellent reputation.  Consider applying to more than one lender, because the more loan approvals you get, the more loan choices you'll have.

Your potential lender will require certain information from you, including current employer information and bank and credit card statements.  You should also be prepared to provide lenders with your investment and pension plan information, social security numbers, tax returns for the last two years, and a balance sheet listing your assets and liabilities.

How do lenders decide whether to lend you money?  Basically, the less risk you present, the better chance you have of having a long-term relationship with your lender.  A lender determines your risk level using a number of different factors and guidelines.  The most commonly used factors are the mortgage-payment-to-income ratio, the total-debt-to-income ratio, and the loan-to-value ratio.

On HomeMortgageLoans.us, you will find several home mortgage lenders plus mortgage calculators, consumer information for potential borrowers, and mortgage refinancing resources.

Bibliography

• Reed, D. (2008).  Mortgages 101:  Quick Answers to Over 250 Critical Questions About Your Home Loan.  New York:  AMACOM.
• Tyson, E. and Brown, R. (2008).  Mortgages for Dummies.  Hoboken, New Jersey:  Wiley Publishing.
• Warren, C. (2007).  Mortgage Ripoffs and Money Savers:  An Industry Insider Explains How to Save Thousands on Your Mortgage or Re-finance.  Hoboken, New Jersey:  Wiley Publishing.

Home Mortgage Consumer Information

• Freddie Mac
  
  This mortgage finance system helps millions of families across America to buy their own homes by linking homeowners to the world's capital markets.  Their website features several helpful articles about home ownership and mortgages as well as about buying and owning a home.
  www.FreddieMac.com
• Fannie Mae Homebuyers Resources
  
  Learn about the financial aspects of buying a home.  Find mortgage lenders and learn about mortgage fraud prevention.
  www.KnowYourOptions.com
• Looking For The Best Mortgage?
  
  Advice and guidance from the Federal Trade Commission.
  www.FTC.gov
• VA Home Loans
  
  A quick guide for home buyers and real estate professionals.
  www.Benefits.VA.gov
• Home Loan Settlement Costs (PDF)
  
  Mortgage closings, also known as mortgage settlements, may involve several people as well as number of documents and costs.  This information will help you understand the mortgage closing process.
  Files.ConsumerFinance.gov
• A Consumer's Guide to Mortgage Lock-Ins
  
  When you are shopping for a mortgage, you typically look for the most favorable interest rate with the lowest up-front costs.  However, unless the lender commits to lock in your rate and number of points for a certain period of time, you may find that these terms have changed by the time your mortgage closing arrives.  This information will help you understand mortgage commitment lock-ins.
  www.FederalReserve.gov
• Consumer Handbook on Adjustable Rate Mortgages
  
  This information, prepared by The Federal Reserve Board and the Office of Thrift Supervision, features a number of frequently asked questions (FAQs) about Adjustable Rate Mortgages (ARMs).
  www.FederalReserve.gov

Related Home Loan Website

• Home Improvement Loans - financing for home remodeling projects.

Home Mortgage Loan Guide - Financing a Home Purchase