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Home Mortgage Loans

[May 22, 2008.]


Buying a home is often considered the realization of the American Dream. A quaint home with a two car garage and a large back yard may seem to be reserved only for those that fall with in the upper crust of the economic caste. However, with a little help nearly anyone and everyone can purchase their first home.

Owning a home is not a realization of a dream, but a wise investment. Unfortunately this investment is also a costly one that may seem out of reach for many, luckily with the help of mortgage loans nearly anyone can afford to buy a home.

A mortgage loan, simply referred to as a mortgage, is a tool that is used by potential home owners in order to make the home buying process financially feasible. When you take out a mortgage you are putting a lien on the property until the mortgage is paid off in full. A lien is used as collateral in the form of a security interest to ensure that the borrower will repay the loan. The penalty for failing to meet the monthly loan payments, or for defaulting, is foreclosure on the home. Foreclosure is when the lender takes ownership of the property as agreed to on the initial mortgage agreement.

In order to get a loan, you will get a mortgage on the home, which will act as a promise that you will repay the loan and all other fees as arranged in full or the lender will have the right to foreclose and you will loose the property.

There are many types of mortgages and each one will cater to different borrowers. It is important to determine which kind of mortgage is right for you and your circumstance since the price of defaulting is so severe. The two main types of mortgages are the fixed rate mortgage, and the adjustable rate mortgage.

For first time home buyers and for anyone that prefers a little stability in the payment amount, the fixed rate mortgage is ideal. With the fixed rate mortgage you will be able to determine how much your monthly payments will be for each month of the loan. Those with a fixed rate mortgage find it easier to set aside the required amount of money each month since they already know what to expect well in advance. The fixed rate mortgage will not fluctuate during inflation and will also not fluctuate if interest rates go down. Fixed rate mortgage take out a certain amount of risk involved but may not yield the advantages like that of an adjustable rate mortgage.

An adjustable rate mortgage is one that adjusts to fit the current interest rates. This form of mortgage will generally start out with a lower payment rate but after a certain amount of time which is prearranged by you and the lender, the payments will begin to change based on the current interest rate. While the initial benefit of an adjustable rate mortgage is attractive to many the fact that you may end up paying far more in the future needs to be considered.

Mortgages are a great way to aid in the buying of your first home. Foreclosure is not a fun process to go through especially when you have invested so much in the property, so as with all major financial and life changing decisions, it will be necessary to weigh all options and make sure that you are able to afford the financial obligations of owning your own home


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