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Paying rent monthly, often more than many others pay towards their mortgages, can be frustrating. Buying a home can be a big commitment, but it can also be seen as an investment, where as a rent check has no lasting benefit.
There are several options to look into if you are interested in buying a home
and several loans available to help you in this process:
- If you would like to have your new home built so that you can customize
it to your tastes, there are construction loans that pay for materials, land
and labor necessary to construct your house. Repayment of this loan would
not be necessary until the construction period ended and you were able to
move into your brand new house.
- For families with lower incomes who may not be able to provide a large down
payment, FHA loans are available. FHA loans are insured by the Federal Housing
Administration but funded by a conventional lender, and limits the amount
of risk to the lender. This lack of risk is transferred to you through lower
down payments and lower interest rates. VA loans are much the same. They are
provided by conventional lenders but insured by the Veterans Administration.
A VA insured loan requires no down payment at all and has a very low interest
rate. Visit the Department of Housing and Urban Development website (www.hud.gov)
to find out more about federally insured and funded home loans.
Buying a new home should be an exciting process, and the prospect of getting a mortgage should not diminish that excitement. Almost all loans have a benefit of some kind, even if it is not readily apparent. For example, most people would prefer a fixed rate loan to an adjustable rate loan. A fixed rate loan has an interest rate that does not change as the repayment period progresses. It offers security since you know at the start of the loan exactly how much you will be paying monthly for the entire life of the loan. Whereas an adjustable rate loan is often seen as an option for those with less than perfect credit because it does not have that security. An adjustable rate is liable to rise and fall since it is decided by certain indexes and does not remain constant. However, it does come with low introductory rates which benefit a home buyer who is only planning to live in that home for five to seven years. Also, if rates where to go down over the years of the loan, a homeowner with an adjustable rate would feel the result of that dip, but a homeowner with a fixed rate would not.