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Home Loans
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Home loans are given by the government, banks, credit unions and other financial institutions to buy a new home or refinance the current one. There are many loan options in the market today-:

- FHA Home Loan
- Low interest Home loans
- Home Loan Refinance
- 2nd Mortgages
- Mortgage Refinance
- Interest-only Loans
- Low down payment loans
- Home Loans for those with Bad Credit

Federal Housing Administration FHA loans have very low interest rates and simple terms. These loans are attractive to first time homebuyers and those who wish to refinance their mortgages. The down-payment is as low as 3% and the credit rating is not as strict as with other lenders. However there is a maximum limit of the mortgage you can borrow.

People with good credit history and a high credit score which indicate they have honored their present and past loans and debts without default are able to get loans with low interest rates. The monthly repayments are lower. These people get fairer terms because they are likely to repay their loans on time.

Most people are able to apply for refinance of their existing home loans so they take loans with lower interest rates and better terms than the previous loans. The monthly loan repayments will be lower.

Interest-only loans allow the homeowner to pay the interest for a number of years and amortize the loan after that period. The borrower can choose to repay the principal and interest or continue with the interest-only arrangement. This is a good option for someone who expects the salary to increase or for a student who expects to finish college, get a promotion and be able to repay the loan. However this is a high risk loan which the lender might not recover in full. These home loans carry a high APR than normal loans
Down-payment loans are less risky. The homeowner pays a down payment to cover part of the loan. The house will be used as the security against the home loan. Paying the down-payment shows the ability and the willingness of the borrower to repay the loan. The higher the down-payment the lesser the interest rate the lender will be willing to offer. Zero-down payment loans offer 100% financing without any down-payment. These loans are risky because when the borrower defaults there will be no down payment to recover part of the loan from.
Home loans for those with bad credit bear higher interest rates and more monthly repayments because of the risk involved. The borrower might not pay the loan on-time and might default on the loan if he has done so in the past. Lenders are more cautious when lending to such borrowers especially those whose credit has been damaged by bankruptcy, re-possession, foreclosure, tax lien, judgments, collections, default and late payments. The credit score, collateral, debt ratio and loan to value of the property LTV are important indicators which will be checked before granting home loans.

Last modified onTuesday, 02 April 2013 23:37
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