Getting mortgage money was relatively easy just a few short months ago. That was When house prices were steadily rising and homes were selling practically before they were listed. But that was then and this is now. Things have cooled off a lot, and with a slow down in the real estate market has come higher interest rates along with tougher conditions for getting mortgage approvals.
Perhaps most important, interest rates have been rising slowly for a number of months. This may not seem like a big deal if you are new to the home buying market. But on a large home mortgage even a small interest rate increase can make a very big difference to your payment.
In most cases the interest rate can even make the difference between being accepted or rejected for a home mortgage. That's because in order to qualify for a home mortgage your ability to afford the payment is one of the most important criteria for getting approval. And a higher interest rate could easily put the payment out of reach.
**Find a home mortgage advisor**
Before making home mortgage decisions you should find a professional advisor who has a lot of experience in the home mortgage business. Often the best advisor is a mortgage broker not directly affiliated with any one lending institution. The best advisor has in-depth experience and current knowledge of real estate and mortgage trends. This kind of mortgage advisor also can make use of many different sources of mortgage funds.
Often your best choice will not be your regular banker. Banks almost always recommend their own products and are not very interested in suggesting other products - even if they are a better deal for you.
Look at it this way: if you have a good credit rating you can probably get a better deal than the one your bank is prepared to offer. On the other hand, if you have credit problems or need some creative suggestions, you'll probably not get them from a bank. They want you to conform to their requirements and rules.
Yes, a bank is fine if you aren't interested in getting a better deal. However, if you want alternatives or creative suggestions you're better to go elsewhere.
But where should you go? You should start by looking for a home mortgage advisor who is not tied to any one financial institution, someone who knows the market from the inside and who has access to many different sources of mortgage funds.
**Good deals are still available**
Even when credit starts tightening up there are ways to get a good deal on a home mortgage. Sometimes these good deals involve government backed loans such as FHA loans. These loans exist to help people with even horrible credit to borrow as much as 97 percent of the value of their home. The primary requirement is that they have the necessary income to make regular payments.
People who might not otherwise qualify are given a shot at home ownership by mortgage plans like these. That usually makes them a very good deal for many people. But many traditional lenders will not recommend them because there is not enough profit in it for them. Some traditional lenders are not even aware these alternatives exist.
In fact many mortgage brokers won't recommend these loans either because they take extra work. However, from your point of view it is really worth finding a mortgage broker who will find the best deal for you. It could save you literally thousands of dollars over the life of your mortgage, and it could make an otherwise impossible mortgage a reality.
**An ARM can be a good short term solution**
Another mortgage possibility is called the "option adjustable rate loan" - commonly referred to as an ARM. Many people took advantage of this approach in the most recent real estate boom. If you qualify you could pay as little as 1% interest against a "real" rate of about 7.25%. To qualify you need a very good credit rating and good prospects for the future.
But beware. The unpaid interest is added to the principal of your loan, so the amount owed actually goes up over time. That means an ARM loan must be used very cautiously because a home owner can end up owing more than they can afford to pay.
But this approach does give a borrower the option of making drastically reduced payments for a short period of time. It is used most often when a person has serious short term cash flow problems, or when they foresee their financial situation significantly improving a year or two in the future.
**Make the right mortgage choices**
While these days qualifying for a home mortgage is more difficult, and affording a home mortgage is more expensive, there are still ways to save money - especially when your advisor can bargain between a number of different money sources. To find these deals it is very important to find those sources. That is why it is so important to deal with an experienced professional advisor you can trust. This person will have in-depth knowledge of the current home mortgage situation and be experienced in dealing with situations like yours.
The best advisor is a broker with years of experience and hundreds of different lenders to draw on. That kind of broker can find an affordable mortgage for almost everyone.
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