Buzz About Sacramento: Understanding the Home Loans

Owning a home is everyone’s dream. When you decide to buy a home, it will be the most important decision of your life. This decision will involve making many choices when it comes to financing your home. If you cannot finance your home, then do not worry. Help is here. A home loan is your answer. Home loans and mortgages of various types are available. All you will have to do is select the one that best suits your finances. For that, a thorough understanding of the different types of home loans and mortgages is required.

The mortgages from private lenders are basically classified as fixed rate and adjustable rate mortgages.

A fixed rate mortgage has a permanent rate for the life time of the loan. This rate is not influenced by the external economic factors like inflation. This most common mortgage has many benefits. With the mortgage premium fixed, the borrower is well aware of how much he has to pay regularly. In such a case, he can plan his finances to suit his repayment scheme. The loan period of a fixed rate home loan is 15 to 30 years. You can also reduce the loan period by paying more amounts every month. This is the best option and is mostly chosen to protect you against inflation.

An adjustable rate mortgage has a variable interest rate over the loan period. This loan takes some amount as interest rate risk from the lender and gives it to the borrower. If the interest falls, this risk amount is beneficial to the borrower. The borrower is however, not forced to pay any fixed amount every month. These loans are widely popular because of the low introductory interest rates. But the borrower is prone to the risks of changing interest rates depending on the external economic factors.

The loans from the federal government towards housing development are the VA and FHA loans.

The FHA does not offer any loans to the home loans seekers. They actually insure the loans from private lenders. This is like a security for the lenders if the borrower defaults. These loans are perfectly planned to suit the first time buyers. These FHA loans also offer a very low or no down payment. Hence, borrowers are not required to put aside heavy amounts for down payments and closing costs. This is an effort by the government to help people with low income and bad credits realize the dream of owning a home.

The other type of loan from the federal government is the VA loans. These loans are offered only to veterans and military personnel who completed certain years of service. The VA loans are very similar to the FHA loans. These loans have absolutely no down payment. They are offered with a funding fee of about 3.3 %. Veterans can also apply for these loans to retain their homes.

You must carefully choose a home loan that best suits your finances. You must carefully plan so that you do not end up facing foreclosure for non repayment of the home loan.

For additional resources and information please visit the following sites.

Resource Links:

http://www.gmacrealestate.com

Bill Fields All Star Coaching Program: http://www.AllStarCoaching.net
GreatWest GMAC Search all MLS Listings: http://www.LocalHomeLink.com
GreatWest GMAC Consumer Buyer/Seller Blog: http://www.GreatWestBlog.com

T. Sami Siddiqui (Broker/ Owner) Buzz About Sacramento Blog: http://www.samisiddiquiblog.com
Brodie Stephens (Executive Vice President) One Stop Blog: http://www.brodiestephensblog.com
GreatWest Podcasts- Weekly Updates on new REO, Short Sale, Bank Owned Foreclosure Listings: http://www.HouseTalkOnline.com
GreatWest Videos: http://www.youtube.com/brodiestephens
Facebook Brodie Stephens Profile Page: http://www.facebook.com/brodiestephens
Facebook GreatWest Profile Page: http://www.facebook.com/searchmlshomesforsale
MySpace Brodie Stephens Blog: http://www.myspace.com/brodiestephens
MySpace GreatWest Blog: http://www.myspace.com/greatwest
Picasa Web Album: http://picasaweb.google.com/brodiestephens