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30 Year Home Loans

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It used to be the first choice of most borrowers, because since the total payments are spread over a longer period of time with the interest rate set for the entire time of the mortgage. 30 year home loan rates are an industry standard but is it the right choice for you?

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The 30 year home loan is an industry standard, but is it the right choice for you?  Because the total payments are spread over a longer period of time and the interest rate set for the entire time of the mortgage.  This was the first choice of most home owners.

 

As we mentioned, the plus side for a 30 year home loan is lower monthly payments.  This attraction is somewhat dimmed by the fact that you pay thousands extra in interest.  But, your interest is 100% tax deductible which does lower your after tax cost.  It offers you some flexibility so that if your financial situation changes and you have more money you can pay it off in less than 30 years, this while keeping the low monthly payments.  Your payments are smaller so in reality you can purchase a larger roomier home.

30 Year Home Loans

To show an example of the interest difference between 30 year home loan rates and one of the other rates.  On a 30 year, 100,000 dollar loan using 7% interest rate your monthly payment of interest and principle would be $665.30 dollars.  Over the next 30 years you will have paid $139,511.04 in interest alone.  Now with a 15 year home loan rate on the same amount you will pay $871.11 per month and over the next 15 years, you would pay $56,799 in interest.  This would save you $82,712 dollars.

 

If you have the will power to invest the savings from the monthly payments, it still could be a good choice to go with the 30 year mortgage.  Especially if you can find an investment that the long term payoff matches or exceeds what you would save in a 15 year mortgage.  Another factor to consider is how fast you want to accrue equity in your home or to own it out right.  30 year home loan rates take much longer to build equity.

30 Year Home Loans

 

30 year home loan rates are certainly attractive and the vast majority of home buyers get 30-year loans because that is the longest home loan available today.  Experts agree if they could get a 35- or 40-year loan, they probably would.  There are many other options to consider.  Probably the biggest question you have to ask yourself when considering a loan is what are your financial goals?  What loan plan will help you the most to reach that goal?  It is clearly to your advantage to look into other loan options for the best loan available for you and your financial goals.  It may surprise you that because of your personal situation there may be other plans more suitable for you.

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During the recent span of years, it has been observed that the demand of home loans has increased. The main reason being, the availability of loans in market has increased too. Home loans are now a days available in the market at pretty low and attractive rates.

 

Home loans are recent craze in the loan market now days. The reason being the fact that, home constitute out as the largest asset that usually people have. While purchasing a home, the person has to invest a very huge amount of money. Some people face trouble, paying out the whole money together for the house, while some can’t even afford to invest money for the home of their choice. Home loans, this way have turned out to be a boon for people, who want to have a home of their choice, but cannot afford it at the moment concerned.

 

Buyers now days don’t have to think about the source of money for their homes. Home loans have made the life of a lot of buyers very easy. But, the buyers should be careful while opting or going for a home loan. They should first, make a thorough research of the prevailing interest rates in the market, and then opt or go for any home loan. Borrowers can even go for home loans, by undertaking mortgages. In this, the borrowers take a loan after pledging or securing any asset or securities of theirs, against the sum borrowed by them.

 

While going for a home loan, the individuals should take care of the other various aspects relating to the home loan. An individual before going for a home loan should take care, before deciding the principal amount that he is going to borrow as a home loan. Otherwise the person may end up taking a loan with a higher principal amount and then end up paying more interest for the amount that he had borrowed unnecessarily. The second aspect that the borrower should consider is the interest factor associated with every home loan. Interest is an unwanted burden that comes attached with the home loan. Interest is the extra amount that the borrowers have to pay, for taking the loan from the lender. The borrowers motto should be take a loan which carries the lowest interest rates. For this, the borrower should make a complete research of the prevailing interest rates in the markets so that he does not get cheated by the home loan lenders. Borrowers should also consider the aspect of the term associated with the loan that he has undertaken, otherwise they may end up paying or repaying the loan for 30 to 35 years, just because of the fact that the loans conditions had stated that the principal amount has to be repaid on fixed amount over 30 years installment basis.

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Home loans are a boon for people, but they should be careful before opting for a home loan.

You have found that dream home, now which of the home loan programs is right for you?  There is no simple answer to that question; home loan programs need to be studied to choose what is best.  This all depends upon your individual family preferences and financial circumstances.

 

Some factors to consider when choosing from the different home loan programs.  Your current financial situation, do you expect this situation to change?  How comfortable are you with a changing mortgage payment?  A fixed rate mortgage can save you thousands in interest over the period of the loan, but it will also give you higher monthly mortgage rates.  An adjustable rate will start you out with lower monthly payments but you could face higher monthly payments if the rates change.

 

You have decided which type of loan is best for you, now you need to choose which of the more popular home loan programs, is the best one for you.

 

Conventional loans are secured by government sponsored lenders.  They are also known as government sponsored entities (GSE’s).  They can be used to purchase or to refinance single family or 4 plex homes with a first or a second mortgage.  There are limits that are adjusted annually if needed based on the national average of new homes.  You would need to check what the current year’s limits are for an accurate amount if you were to choose this type of home loan program.

 

FHA loans are programs to helping low income families become home owners.  By protecting a mortgage company from default they encourage companies to make loans to families that many not meet normal credit guidelines.  Some of the highlights of these loans are.  Lower down payments can be as low a 3% versus the normal 10% requirements.  Closing costs of up to 2 or 3 per cent of the home value can be financed, this reduces the up front money needed.   The FHA also imposes limits on the fees from the mortgage company such as the loan origination fee can not be more than 1% of the amount of the mortgage.

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VA loans are available to military veterans who served on active duty and were discharged under conditions other than dishonorable.  The dates for eligibility are WWII and later.  World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 day’s active service.  There are other eligibility requirements.  If you think you may be eligible contact your local or state veterans’ administration representative.

The biggest factor in a VA loan is that no down payment is required in most cases.  There is no mortgage insurance payments needed, closing costs to the buyer are also limited.  You can negotiate rates with the lender and you then have a choice of payment plans with up to a 30 year loan.

 

The last loan program we will mention is called a subprime loan.  This is a loan for people with poor credit who would not qualify for a conventional loan or a VA or FHA guaranteed loan.  These loans normally will require a higher down payment and have a larger interest rate.  This is because of the risk involved to the mortgage company.  These loans should normally be considered for a limited amount of time such as 2 to 4 years.  It is a good way to improve your credit situation and then refinance with more favorable terms.

 

We have shown finding or planning that new dream house is just the beginning of the journey into your new home.  The right answer to the question, which of the home loan programs is for you, takes research and a honest look at your personal situation.

 

 

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Nikhil Sangani
Nikhil Sanganihttps://www.fatfattech.com/
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