Features Of Home Mortgages That Buyers Must Know In Advance

Buying a house is not easy. This big investment involves big risks too. Furthermore, there are times when big things are hidden from you because you would reject an offer if they were disclosed on you. Paying the down payment on a house is just the starting of a big challenge coming up. After moving into the house you have to continue to make mortgage payments for decades. You have to manage these payments and remain consistent with your job so they are not missed. If you miss payments or stop making them completely, you could be in trouble and lose your house eventually.

There are many things that you must know about home mortgages before you buy your own house. The first thing you must know is that even the things that sound right can be wrong in real estate industry. Take prepayment penalties for example. You might think that you are in a stable financial position and your job is serving you well to pay off the mortgage in advance but the reality could be different. Making an advance payment i.e. attempting to end your mortgage before its decided time by paying more in one go, could attract penalties.

You might have to negotiate your options with the lender but in most cases you will be penalized for doing so. However, you can always talk with the lender and come on terms to pay the minimum penalty that doesn’t affect your mortgage that much. You must also understand the concept of points and interest rate before you buy a new house and choose a mortgage plan. Did you know that you could negotiate and talk to your lender about the closing points? What this means is that you could agree to pay more closing points in order to bring your monthly payments down.

Adjustable rate mortgage is also something that you would want to know before you think of buying a new house and plan how you would pay the mortgage payments. This type of interest rate will remain fixed for a pre-specified time period after which the rates will start to vary every month on most occasions. How the interest rate changes every month is dependent directly on a particular benchmark. Stated income loan is another great option for people who don’t want to disclose too much information about their incomes. Many of the questions asked otherwise are omitted in this type of loan.

In this type of loan the lender puts more trust in what the borrower says. The income stated by the borrower is considered the final word by the lender. A very notorious name for this type of loan is “liar loan”. However, you should not feel embarrassed to for such a loan only because it is called a liar’s loan. The big reason for this type of loan is that many self-employed people have a hard time in deciding what their monthly income is since it keeps varying. Lastly, go for short time duration for loans and you could get mortgage interest rates reduced.

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