Home loan down-payment.
As a general rule of thumb, lenders will be seeking contribution from you of around 3% to 6% of the total loan value. This can be negotiable, and there are many loan packages available.Fixed interest rates versus adjustable rates.
The two most common loan products available for home mortgages are fixed rate versus adjustable rate. Fixed rate means that you agree on an APR (annual percentage rate) that does not change through the life of the loan, whereas, an Adjustable Rate Mortgage, better known as an ARM, means that rates and monthly payments can change, often tied to the U.S. Government Treasury Bills or some other form of index, with the frequency of change dependent upon the terms of the loan. Deciding on which way to go involves many variables. We suggest that you start by examining the fixed rate products available on the market. They are by far the most popular, and arguably with the least amount of risk.After evaluating several preliminary loan offers (quotes) for fixed rate mortgages, you can then venture into the world of ARMs to see if one of these products may be right for you. But, proceed with caution, and understand all the risks, alongside any potential benefits.
APR
APR, better known as the annual percentage rate, aka: “rate, is arguably the most important consideration you must examine when looking for a loan. The APR includes principle, interest, points, fees, PMI (Mortgage insurance), and other costs associated with the loan. While all costs and terms are significant and affect the bottom line, we suggest that shopping rate is a very good starting point.Loan Types
There are several standard loan products to look for, including 30 year fixed, 15 year fixed, bi-weekly mortgages, 1 month ARM’s, 5 year fixed ARM’s, 2nd Fixed, ARM’s with a provision to convert after 5 years, lender buydowns, and discounted mortgages.We think the best place to start, is to obtain quotes for a 30 year fixed rate loan, and then go from there. 30 year fixed rate loans generally produce the lowest monthly payments for fixed rate products, and they are relatively safe. Once you know where you stand with a 30 year fixed, after obtaining quotes from several lending institutions, then you can consider the possibility of exploring more exotic loan products. At this juncture, you will want to consult with those you trust, for good, solid advice and feedback on risk versus reward.
