Home Loans
By Barry Stein

Buying a home remains the great American dream. Home ownership rates have been
exploding in recent years, spurred on by the historically low interest rates
in the home mortgage market. Home prices have been rising at far faster than
inflation, especially in major urban areas such as San Francisco, San Diego
and Chicago. This means that not only can that home you’ve always wanted put
a roof over your head, but it can provide you with a great investment as well.
For people new to the mortgage market, buying their first home starts with
finding the best home loans.

All potential homeowners should take some time to research home loans before
calling their local realtor. There are a dazzling array of choices available
when it comes to home loans, and finding the right mortgage for your needs
can be difficult. Approach your upcoming home purchase with the same
seriousness you apply to other major purchases. Your home will most likely be
the biggest single investment you ever make. Take the time at the beginning
to educate yourself about home loans. It will be time well spent.

Home loans are available from a wide variety of sources. These sources include
banks, savings and loan associations, credit unions and mortgage brokers.
Shop around at all of these sources to find the home loans with the lowest
interest rate and lowest costs.

You will also have to decide between fixed rate home loans and variable rate
home loans. Variable rate home loans are often advertised with extremely low
“teaser rates”. These rates are used by lenders to get your attention and
lure you in.

Before signing up for a variable rate mortgage, make sure you find out what
the interest rate cap is. Variable rate home loans are usually based on an
underlying interest rate, like the prime rate. The interest rate you pay will
typically be the prime rate plus or minus a certain percentage. The variable
rate mortgage will have a cap above which the interest rate cannot rise. Find
out what that cap is, then use a mortgage payment calculator to see what your
monthly mortgage payment will be at that rate. If you cannot afford the
monthly payments at the maximum interest rate, you may not want to take the
mortgage loan. While it is unlikely that interest rates will rise
sufficiently to make the maximum interest rate kick in, it is always a
possibility.

Variable rate home loans can be a good choice if you believe interest rates
are likely to fall. In an environment where interest rates are steady or
rising, they may not be so good a choice. You may also want to consider a
variable rate mortgage if you do not plan to stay in your home more than five
years. For instance, if your job transfers you every couple of years, you
could probably get away with a variable rate mortgage and take advantage of
the lower interest rate. When you move and sell your home, you will probably
realize a gain due to rising home prices.

On the other hand, fixed rate home loans have a set interest rate for a set
period of time, generally either 15 or 30 years. The interest rate does not
change, therefore you will always know what your monthly mortgage payment
will be. You are protected from rising interest rates with a fixed rate
mortgage. If rates fall significantly, you can always refinance your mortgage
loan to take advantage of the lower rates.

If you can afford the payments, 15-year home loans can substantially lower the
amount of money you will ultimately pay for your home. When you run the
numbers on a 15-year versus a 30-year home mortgage loan, you may be
surprised at how affordable the 15-year home loan can be. Your mortgage
payment will not double if you go with a 15-year mortgage versus a 30-year.
This has to do with the affect of compound interest. You are paying far less
interest in the long run on a 15-year mortgage.

Whatever type of home loan you decide on, the most important thing is to take
that step which transforms you from a mere renter to a home owner and builder
of equity. There are a great many home loans out there, but once you find the
right one, you will find the rewards of home ownership well worth the time
and effort put forth.

Barry Stein is the owner of aWebBiz.com (http://aWebBiz.com) where he offers
cutting-edge tips on all aspects of business. To find more advice, tools and
resources to help you succeed in your business, visit: http://www.aWebBiz.com
(http://www.aWebBiz.com).

Barry`s Internet Marketing Blog: http://aWebBiz.com/blog (http://aWebBiz.com/
blog)