Mortgage Loans and Home buyers

Mortgage Loans and Home buyers

Are you a first time home buyer seeking to enter the home buyers market, or perhaps a current homeowner looking to refinance or take out a second mortgage on your current home? There are still many good options available for those seeking some type of mortgage loan.

Choosing your best option

With so many different mortgage options still available, home buyers and those looking to capitalize on equity they may still have in their home can find it difficult to determine which type of loan would be the best option. There are still many lenders on the Internet and within local communities who are writing mortgage loans. Depending on where you live in the world, you can find any number of options available to purchase your first home.

One consideration you will want to make, is truly evaluating how much mortgage you can reasonably afford. As the current global economy substantiates, we all would be best served to conservatively evaluate our own financial situation to avoid making a very costly financial mistake. As time has proven, hindsight is 20/20.

Research your loan, knowledge is power

If you are a first time home buyer, one of the standard rules banks used to employ, before lending and investing became not so strange bedfellows, was the general principle an individual could afford a mortgage loan of 2.5 to 3 times his/her annual gross salary, adjusting for other debt carried in relative proportion. A person who made $50,000 annually could afford a mortgage loan anywhere between $125,000 to $150,000, provided they were debt free and had no other monthly revolving debts to consider. That standard was, for the most part, the fundamental standard in 1999 and is more likely the standard we will return to.

More research, better options

If you have a down payment and good credit, you are very likely to still find a reasonable interest rate on the home you desire. Knowledge is power. If you are a savvy purchaser and do the due-diligence, you could save thousands by taking advantage of special offers and other available options. Be prepared though, with home values plummeting globally, you want to ensure that you are comfortable with the potential risk that your purchase may significantly decrease in its overall value. Though housing prices have shown signs of stabilizing in some areas, there are still substantial risks in paying too much for a home. Even those who think they negotiated a good deal will likely be unable to sell their home should interest rates rise and unemployment remain high.

If you want to purchase a home, think of it as just that: a home. Consider how long term you are planning to stay before selling and moving up to a larger home.

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