Home Mortgages: Think Before You Borrow

In today's overheated housing market, lenders are making it easier and easier to get a mortgage. For example, some lenders have lowered the credit score needed to qualify for a mortgage. Others have increased the debt load that borrowers can carry or have made it easier for borrowers to get loans while providing little documentation. In some cases, lenders have even made it easier for people to borrow money to buy investment properties.

There are also many kinds of mortgages available today that were never available before. There are interest only mortgages, adjustable rate mortgages (ARMs) for 3,5 or 10 years and adjustable rate mortgages with balloon payments at the end of a five or ten year period.

There are even adjustable rate mortgages that have introductory rates as low as 1% and that give borrowers multiple payment options.

Lenders also used to loan only 80 percent of a home's value, meaning that the borrower had to come up with 20 percent as a down payment. So, if you wanted to buy a home valued at $150,000, you had to put down at least $30,000. This might have been difficult, but at least you started out with $30,000 in equity in your home.

This standard was then lowered to ten percent, meaning you needed only $15,000 to buy that $150,000 home.

Today, it's possible to find mortgage brokers who will lend 100 percent of the value of a house or even more than 100 percent.

This can be good news for families who, until now, might not have been able to afford a $10,000 or $20,000 down payment. But you need to be careful of. Some unscrupulous lenders may try to sell you a mortgage you can't really afford. Let's say your monthly take home pay (after taxes and other deductions) is $4,000. You find a house for $150,000 and a mortgage broker willing to lend 100% or the full $150,000. A 30-year fixed FHA loan (not including taxes and insurance) will have a monthly payment of about $851.00. The total monthly payment PITI (with taxes and insurance) would most likely be close to $1,000.

A good rule of thumb is that your cost of housing should not exceed 20 percent of your net monthly take home pay (after taxes and other deductions). This means that for a $1,000 monthly mortgage payment, your net monthly income should be at least $5,000. If your income were only $4,000 a month, you would be spending about 25% of your income on housing alone.

Before you make this kind of commitment, you should take a long, hard look at your other commitments, such as car payments, tuition, and insurance to make sure you can cover them as well as your normal living expenses.

Easy, no-down mortgages can be very tempting, but it's important that you understand the exact terms and that you can meet them without stressing your finances.

For FREE help with debt and credit, subscribe today to Douglas Hanna's free email newsletter "8 Simple Steps to Debt Relief" at http://www.all-in-one-info.com

---

Mortgage Refinancing - Does Size Matter After All?

Hopefully your ego has never had to experience the words,... Read More

Types of Financing for Your Mortgage

When financing a home purchase, the kind of mortgage you... Read More

Mortgage Refinance - Tips to Help You Cut Fees and Costs

Saving money through a mortgage refi is more than just... Read More

Bad Credit Home Financing - Buy a House Even With Poor Credit

Sub prime lenders come in two groups: reasonable and unreasonable.... Read More

10 Questions To Ask Your Mortgage Rep or Banke

This post is a must read for anyone considering purchasing... Read More

Seller Financing

Although any loan used for buying real estate is strictly... Read More

No Money Down Mortgage Loans - Ways To Get Approved For a Home Loan Online With Zero Down

No money down mortgage loans enabled more people to own... Read More

What On Earth are Home Equity Loans?

Home equity loans are one of the most common types... Read More

FHA Mortgage: Whats the Best Way to Show an Underwriter that Youre Ready to Buy a House?

Mortgage underwriters can be a suspicious bunch. If you have... Read More

Say Yes to ISA Mortgages for a Convenient Mortgage Repayment

Customers who opt for an interest only mortgage, and feel... Read More

Helpful Mortgage Advice

Mortgage advice overwhelming you? Many people get advice from everyone... Read More

Homeowners? insurance: The mortgage connection

A home owners' insurance is the cover for the house... Read More

Secured Loans ? Making the Most of Your Home as Collateral

My visit to the lender was interrupted with my wife... Read More

Key an Eye on Your Mortgage Payments

In previous decades, when a borrower missed a payment on... Read More

Buy a Home With a Government Grant? Avoid this Scam

If you watch enough late night television, you'll see advertisements... Read More

What the Bank Won?t Tell You About Mortgage Refinancing

So you have a mortgage, and you need to refinance... Read More

5 Tips for Savvy Use of Your Home Equity Line of Credit

Tapping your home's equity to pay college expenses, consolidate credit... Read More

Selecting the Right Mortgage for You

A mortgage is a loan you take out to buy... Read More

How easy is it to get a Commercial Mortgage in the UK?

As is the case when applying for any mortgage, be... Read More

Refinance Your Home Mortgage Online

The largest financial obligation most people ever take on couldn't... Read More

Option One Mortgage Loans ? Getting an Option ARM or Option One Mortgage Loan

Have you heard about or been interested in finding out... Read More

Reverse Mortgages Learn The Facts First!

Reverse Mortgages, Most Common Features:Many offer special appeal to older... Read More

Private Mortgage Insurance Basics

Will you be asked to pay Private Mortgage Insurance, or... Read More

Revive Mortgage Tenure With Extend Loan Term Remortgage

You are comfortably wedged in a mortgage deal, paying the... Read More

Understanding a UK Commercial Mortgage

In many ways a commercial mortgage is just like a... Read More

Internet & Mortgage Calculations

"You've been approved!" The words you have always wanted to... Read More

Refinance Your Property Online

By refinancing your property online you can take advantage of... Read More

The Best Way To Get The Right Mortgage

Are you thinking of buying a home? If so, then... Read More

Do Your Homework - Find the Mortgage That Fits Your Lifestyle and Your Budget

You've been looking at houses for months, and finally you've... Read More

Bridging Finance Basics

Bridging finance is a short-term loan that is used as... Read More

Should You Choose to Refinance?

Refinancing has become a valid option for many individuals with... Read More

Council Right to Buy Mortgage ? Helping Everyone Have a Home of

"We will help every Council Tenant to become Home Owners"... Read More

Find the Best Mortgage Company

If you do not wish to commit to living in... Read More