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What You Need to Know About Home Mortgages

What You Need to Know About Home Mortgages By Sarah Clark
HIPhome Columnist
December 31, 1969

This primer on home mortgages will introduce you to some of the most popular loans available to home buyers. It will also show you what to look for in a home loan. Be sure you're fully prepared to take on what will likely be the biggest loan of your life.

Where Can I Get a Mortgage?

The first place you might consider shopping for a home mortgage is your local bank. But don't stop there. Make sure you shop widely for a mortgage, checking home loan rates and conditions at savings and loan associations, commercial banks, mutual savings banks, and mortgage companies.

Types of Mortgages

The most popular mortgages are fixed-rate, adjustable-rate, and convertible mortgages. Fixed-rate mortgages offer the same interest rate throughout the life of the loan. Adjustable-rate mortgages, or ARMs, do not have fixed interest rates. Convertible mortgages have both fixed and variable rates.

Many people find ARMs attractive because their introductory interest rate may be set lower than that of a fixed-rate mortgage, making it seem more affordable. However, when considering an ARM, you should determine whether you can afford to make the loan payments if and when the interest rate increases.

Also, if you are a veteran, a person with a low income, or a first-time buyer, you may qualify for a special loan. Be sure to ask your lender about such loans.

Important Considerations Concerning Interest Rates

You may be able to reduce your mortgage interest rate or monthly loan payments by applying a larger down payment toward your home. Another way to qualify for a lower interest rate may be by establishing a strong credit history. Since credit histories play such an important role in your ability to secure a good loan, it's worth getting a copy of your credit report to make sure the report is accurate.

With these tips, you'll be one step closer toward finding a mortgage that's right for you.

About the Author
Sarah Clark is a freelance writer based in Arlington, Virginia.

*Before you apply any of the advice described on the Hip-home.com website, you should consider if the advice is safe and suitable for your individual home situation and consult experts as necessary to evaluate the suitability for your circumstances.
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