A buyer with a blemished credit would be more likely to qualify for an adjustable rate loan. Though this loan carries more risk since the interest rate adjusts with current interest rate indexes, adjustable rate loans usually come with low initial rates and safety caps to keep the rates from rising too high. Also, if the rates fall, it is possible for the borrower to save money.
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For example a potential homeowner with good credit but a low income would be well matched with a fixed rate FHA insured loan. This would allow a low income buyer to take advantage of relaxed qualification criteria, low interest rates and little to no down payment. If the same buyer were to apply for a conventional loan a loan that is not federally insured he or she would be faced with high interest rates and a large down payment to make up for a lack of income.
Home Loans Closing Costs
Contrary to what many believe, the closing costs presented to home buyers are estimates. For this reason it wise to assume that the closing costs could actually be slightly higher than the quote a mortgage broker gives you. Lenders are required by law to provide what is called a Good Faith Estimate detailing the expected costs associated with closing the loan. You should look over these figures carefully and compare them to those of competing lenders. Keep in mind, lenders are not required to list every expense that may be incurred in acquiring the loan.
As a result of current low interest rates many people who are renting are now looking into buying a home. There are many ways to obtain a home loan, and many have low down payments, low interest rates and low monthly payments. Apply online to contact up to four lenders about your home loan.