The most common form of home loans are mortgages. Mortgages tend to be the biggest financial loan that you will ever take in your lifetime. However, everyone requires a little guidance and advice before taking this decision. This article will provide a brief guide on how to achieve that all important mortgage approval.
A mortgage is a loan to finance the purchase of a real estate, usually with specified payment periods over a period of time. The borrower gives the lender (usually a bank) lien on the property as collateral for the loan. Mortgage lenders are traditionally banks. However, the mortgage process itself may be a difficult one especially to those with a poor credit rating. This article will discuss how to get a mortgage at the best rate, and how to qualify for one.
Different types of home loans
The many different types of home loans include the following: - Variable rate home loans - Controlled/capped home loans - Fixed rate home loans - Combination or split loans - Low documentation or no documentation loans - Interest saver/100% offset loans - Home equity loans - No deposit home loans - Reverse mortgages Mortgages
These are the most common forms of home loan taken by people when purchasing property. So, how do you qualify for one? When you approach a bank for a mortgage, expect them to go through a long list of questions. The questions are always regarding your current financial state. All banks want to feel secure that you're able and responsible enough to pay them back. So, you'll usually need the following things in order for the bank to give you a loan: - Enough money for the down payment (3 to 20% of the purchase price) - Two years of steady employment (same job or field) - Good (not perfect) credit score (~660+, as of 6.09.2010-2011) - Monthly income that's two to three times higher than your expected monthly mortgage payment Conclusion
Always remember to look out for the APR rate. The higher the APR, the higher the interest rates on your repayments and vice versa. The lower the APR rate, the lower the interest on your repayments. Look for the cheap APR loans.