s Congress and In a 5/1 ARM the rate of interest
professional real estate on your real estate mortgage is
organizations debate the set for the first five years,
best ways to keep homeownership then fluctuates yearly after
available to most Americans, many that.
first-time homebuyers find
themselves confused by their Low/No Down Payment Real Estate
mortgage loan options. The Mortgage Loans
government’s attempt to protect
borrowers from unscrupulous In 2006 USA today reported that
lenders also hinders the ease of 43% of real estate mortgage
first-time real estate buyers in borrowers didn’t put any money
obtaining these loans. One of the down on their home loans. While
best ways to find a loan that this is more difficult with
will work is to know the options stricter regulations, lower and
that exist, the benefits, and the no down payment real estate
risks. mortgage loans do exist.
Typically these are available to
Conventional Real Estate Mortgage those with a strong credit and
Loans stable work history, but little
cash on hand.
Traditional 30-year and 15-year
fixed loans are widely available, Government Funded Real Estate
and the most popular options. But Mortgage Loan Programs
adjustable rate loans, where the
interest rate fluctuates with First time homebuyers and
prime lending rates, are also low-income borrowers are eligible
very popular. In fact, interest for a wide variety of government
rates on 5/1 ARMs dropped at the insured real estate loans. The
end of June to an average 6.04%. Federal Housing Authority (FHA)
funds many of these. Specific obtaining a real estate mortgage
programs exist for community out of reach for the general
workers like teachers and police population. Many concerns have
officers, Native American risen from defaults on Alt-A,
Indians, and residents of interest only, and other
low-income housing projects. Ask alternative loans.
your real estate agent or
mortgage loan officer what you In fact, Alt-A real estate loans,
qualify for. which give non-traditional
underwriting options to good
Alternative Real Estate Mortgage credit candidates with issues
Loan Programs like poor documentation or
expanded debt-to-income ratios,
The real estate reality is that are showing high delinquencies.
traditional mortgage loan options Standard & Poors reports that as
don’t work for everyone. This is of June 2007, the defaults on
why loans evolved that let you Alt-a Loans for 2006 were four
tap the equity in your home, pay times higher than in 2004.
off the interest first, or forego
Private Mortgage Insurance. These These loan options may still work
can all be great tools and have in your individual situation.
their place- when applied Balance your need for a lower
ethically and with financial interest rate, lower monthly
awareness. payment, or lower down payment
against your ability to handle
Both the National Association of the balloon payment or interest
Realtors and various Senate increase at the other end of your
subcommittees are working on real estate loan.
developing guidelines that
protect borrowers without making
About the Author:
John Harris is a researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more information please visit Scripps Ranch Homes for Sale
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J Harris
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