The better your ability to repay the loan, the better interest rate you will receive.
We Buy Houses | Isle of Palms SC: Home buyers are almost never able to pay cash for their homes. That’s why mortgage loans exist. It’s a huge purchase and must be financed. You’ll go to a lender that gives these large loans to potential homeowners. Your request for a loan may be approved or denied, depending on your situation and what type of loan you have applied for.
There are three basic types of mortgage loan. A conventional loan is given to those with solid incomes and credit at varying interest rates according to your eligibility and circumstances. The better your ability to repay the loan, the better interest rate you will receive. The interest rate is significant as it will determine what you are really paying for the house in the long run. It also determines how high or low your monthly mortgage payment will be.
A VA, Veteran’s Administration, loan is one that is guaranteed by the government and is designed for US veterans and service members. This is one way that America can repay those willing to serve in the armed forces. The qualifications are specific and can require much documentation.
The FHA, or Federal Housing Authority, loan is also sponsored by the government and is designed to help those with low income to own homes. With both the VA and FHA loans the down payment you must come up with will be significantly lower than that of a conventional loan.
“If one lender doesn’t budge and requires a large fee for early payoff, you can seek other lenders to get a better deal.”
Taking out the loan means that you agree to repay the lender the entire amount due them. If at any point in the payoff process you decide to sell the house, the lender will be paid off before you see any of the profits of the sale. In other words, if you still owe $148k on your house and you sell it for $154k, you will receive only $6k minus any fees or other liens owed on the property.
Another point to beware of is the penalty for early payoff that is written into many mortgage loan contracts. It’s good to know this before you take out a loan, as it will be something you may be able to negotiate. If one lender doesn’t budge and requires a large fee for early payoff, you can seek other lenders to get a better deal. Most people don’t remain in their homes for the full 30 years of the loan, so the early payoff will most likely occur.
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