Home Mortgage Loans

Home Mortgage Loans - Compare Fixed Mortgage Rates

 

Unless you are one of the very few American consumers who have a couple hundred thousand dollars in your checking account, you will probably need to get a mortgage or home loan when it is time to buy a home. By comparing fixed mortgage rates you'll stand a better chance at getting a good deal on your next mortgage loan application.

If you have good credit and some savings this is actually a very good time to get a mortgage, because home prices in many areas are very low right now. Upheaval in the financial sector means that most lenders are being very careful about the home loans they approve, so if you get a loan, there is a good chance you will be able to pay it.

As with any loan, a mortgage is a risk, both for the borrower and the lender. The homeowner takes the risk that job loss, injury, or other emergency will make it more difficult to scrape together the monthly payments. The home loan company takes the risk that the homeowner will default on the loan, resulting in financial losses.

To mitigate this risk, some home loans carry mortgage insurance (MI), in which a third party agrees to purchase the home if the buyer defaults. The mortgage insurance premium is often collected from the buyer with the monthly home loan payment and holds it in escrow until it is time to pay it to the insurer.

A home loan is a secured loan; this means that it is backed up with a piece of property. In the case of a mortgage, the piece of property is your house. Unlike credit cards and other unsecured loans where the penalties for late or missed payments are generally increased fees or interest rates, missing too many payments on a home loan will result in foreclosure.

For a long time, mortgages were seen as the quick trip to prosperity. Popular mythology held that property values always went up, and lenders were so eager to get borrower’s money that they funneled uneducated consumers into mortgages they would be unlikely to pay off. When this fell through, massive financial upheaval resulted.

The Lessons

-Get a home loan because you want to own and live in a house for many years, not because you think it is a good investment.

-Do not get a mortgage with a monthly payment that is more than 30% of your household income. This way, your income can be reduced 50% and you still have a chance of making payments on your home loan before you recover.

-Educate yourself about different types of home loans and their relative risks. Do not let anyone persuade you to sign on to a mortgage you are not sure is right for you.