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More Mortgage Tips

by Apu Hypallathek, Use Mortgage

For many, the American dream begins and ends with the purchase of their very first home. But, unless your name is "Trump" or "Gates," you will most likely not be able to put down all the money required to purchase your first home. So, you will need to get a home loan - or mortgage - in order to move into your dream home. But getting a home mortgage can be a daunting task.

Getting a home loan involves signing an agreement with a bank or lender to pay them a certain amount of interest on a specified amount of money that they will lend to you so that you can purchase residential property. The home loans are then secured against the residential property which they are used to purchase.

You may be familiar with personal loans or the interest charged on your credit cards. The good news is that home mortgages generally offer a lower interest rate than credit cards or personal loans because of the longer period of time over which you will pay the off the loan and the interest. Your loan payments will usually be monthly, and the repayment terms could be anywhere from 10 to 30 years.

For the most part, there are two main types of home mortgages, with a third sub-type gaining some popularity over the past few years. The first type of home mortgage
is a fixed-rate loan, where the money you borrow is paid off at a fixed interest rate over a certain period of time, say 20 or 30 years. This is the most popular type of home mortgage since most borrowers like to know what their monthly payments will be over the course of the loan. Plus the fixed rate mortgage is not subject to interest rate fluctuations like the next type of mortgage.

A variable-rate mortgage is where the interest rate of the loan changes over the course of the mortgage term. The variable rate mortgage is usually tied to the prime rate of lending available to banks and set by the Federal Reserve Bank in Washington, D.C. When the prime rate is lowered, there is a good chance you will save money with a variable interest rate loan. But, when the rates go up, the cost
of a variable rate mortgage goes up, and this can be a very trying event for those who are on a tight budget as they try to pay their monthly mortgage.

A third type of loan which is becoming more popular in America is the bad credit loan, known as the "low doc" loan. Low doc home mortgages are usually more expensive than traditional home mortgages, with higher fees and interest rates, but this is to offset the additional risk that the lenders must assume when lending money to people with poor credit. But, these low doc loans may be the only way that people with poor credit, no credit history, low incomes, or self-employed people can get a home mortgage.

But, no matter what type of credit you have, there is most likely a home mortgage that is available to you. So keep trying and get into your dream home now!


Apu Hypallathek is the owner and webmaster of Use Mortgage, a leading Internet portal for mortgage information. For more mortgage information and resources, please stop by


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