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If you don't already know it, the real estate market has changed in the last couple of years and the days of easy home mortgages are gone. So if you are in the market for a home mortgage, it's time to start doing your homework. When house prices were steadily rising just a few short months ago, it was easy to get mortgage money. But now that things have been cooling off and the steady increase in prices has virtually come to a halt, banks and mortgage lending institutions have made borrowing more difficult. The interest rate hikes that have taken place over the last few months are quite important for prospective new home owners. If you are new to the real estate market you may not appreciate how important low interest rates are to the affordability of homes. On a large home mortgage even a small change in the interest rate can make a very big difference to your payment. In fact the interest rate of a home mortgage is usually what determines how much you can borrow. That means it is the interest rate that often dictates how much you can spend on a home. The reason is simple. When you apply for a home mortgage the lender determines what monthly paymentyou can afford. And since a large part of each payment is simply interest, a higher interest rate could easily put the payment out of reach. **The importance of your home mortgage advisor** Before making home mortgage decisions you should find a professional advisor who has a lot of experience in the home mortgage business. Often the best advisor is a mortgage broker not directly affiliated with any one lending institution. The best advisor has in-depth experience and current knowledge of real estate and mortgage trends. This kind of mortgage advisor also can make use of many different sources of mortgage funds. This will usually not be your friendly neighborhood banker. Banks work with their own products and are not interested in making you aware of other products that might offer a better deal. Think about it this way - if your credit rating is good and you have a good steady income there are lots of lenders out there eager to give you a home mortgage. So you can probably get a better deal than the one your bank is offering. On the other hand, if you don't have a particularly good credit rating or have cash flow problems you may need some creative suggestions. But your bank is not likely to give them to you. They want you to follow their rules and mee their requirements. In other words, a bank is fine if you don't care about getting a better deal. However, if you want lower cost or more flexible alternatives or you need creative suggestions you're better to go somewhere other than your bank. The altenative is to find a home mortgage advisor who knows the market inside out and who has access to many different solutions from many different sources. **Good news in hard times** Even when credit gets tighter there are ways to get a good deal on a home mortgage. These good deals sometimes involve government backed loans such as FHA loans. Loans like this help people with very bad credit to borrow as much as 97 percent of the value of their home. The biggest requirement is that they have the necessary income to make regular payments - in other words, a steady job. People who might not otherwise qualify are given a shot at home ownership by mortgage plans like these. That usually makes them a very good deal for many people. But many traditional lenders will not recommend them because there is not enough profit in it for them. Some traditional lenders are not even aware these alternatives exist. In fact Even many mortgage brokers will not recommend these loans because they involve some extra work. However, from the borrower's point of view it is worth finding a mortgage broker who will put together the best deal for you. It could make an otherwise impossible mortgage a reality, and it could save you literally thousands of dollars over the life of your mortgage. **An ARM can be a good short term solution** Another mortgage possibility is called the "option adustable rate loan" - commonly referred to as an ARM. Many people took advantage of this approach in the most recent real estate boom. If you qualify you could pay as little as 1% interest against a "real" rate of about 7.25%. To qualify you need a very good credit rating and good prospects for the future. But you must be careful with plans like this. The unpaid interest is added to the principal of your loan, so the amount you owe is actually increasing. Eventually you will have to start making payments against the increased principal amount. So your payments will no doubt be higher than they otherwise would have been. After two or three years your payments could end up being more than you can afford to pay. But what an ARM does is it creates the opportunity for a borrower to make much lower payments for a short period of time. Its most popular use is for people who have short term cash flow problems, or when borrowers see their financial situation improving in a year or two. **What a different the right mortgage makes** While it is becoming more difficult to qualify for a home mortgage, and more expensive to afford one, there are still money saving deals available from many different sources. But you have to know how to find those sources, and that's why it is so important to deal with an experienced professional advisor you can trust. Look for someone who has in-depth knowledge of the current home mortgage situation and who is experienced in dealing with situations like yours. The best advisor is a broker with years of experience and hundreds of different lenders to draw on. That kind of broker can find an affordable mortgage for almost everyone.
Article Source: http://www.financemanual.com
Dean Weber has more than two decades experience as a home mortgage advisor, arranging commercial mortgages and all types of loans. Read these mortgage client testimonials to see how much actual clients appreciate Mortgages-Mall.com You can get a unique content version of this article.
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