Home Loan Financing

Written by Michael Federico
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Most people are not fully aware of all of the home loan financing options available to them. They assume that they will have to take on a mortgage that will be paid off over three decades or so. While this (the 30-year mortgage loan) is extremely common, there are other financing programs a person can choose from. In fact, there are even variations on the standard 30-year plan.

A person who wants to pay off his mortgage as quickly as possible can take on high monthly payments and use rates based on a 15-year loan duration. These loans are best for people who are financially secure enough to handle the payments each month, as they can be thousands of dollars more than payments for a 30-year loan. Taking on a short-term mortgage might mean more of a struggle at first, but in the end a person will pay far less than he would with a 30-year mortgage.

Adjustable Rate Mortgages as Home Loan Financing

Many people who buy homes want to save as much money in the short-term as they possibly can. These people will often benefit from an adjustable rate mortgage (ARM). An ARM usually has a very low rate to start with. This rate will remain fixed for a pre-determined period of time. The low rate will often be accompanied by low monthly fees and it will allow a person to start paying off the principal of the loan as opposed to just paying off interest. However, when the initial period is over, the rates can increase greatly in a very short time.

Securing adjustable rate mortgages and short-term mortgages is usually more difficult than getting long-term fixed rate mortgages. A person needs to have a strong credit background and he should be able to prove that he can make high payments each month. No matter what type of home loan financing a person is interested in, he should always "shop" the market before settling for a lender.

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