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

In The News:

pen paper and inkwell

cat break through

Find the Best Mortgage Company

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

Refinancing Your Home - How and Why?

Chances are you may need a little extra money to... Read More

Home Buying ? What Can You Afford?

Okay, you've decided to buy a home and are trying... Read More

Zero Down Payment Mortgage ? Can It Be Done?

"I've been renting for years now; I've always paid my... Read More

Key an Eye on Your Mortgage Payments

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

Tips for First Time Home Buyers

When looking at tips for first time home buyers, you've... Read More

How To Save Thousands in Interest on Your Home Mortgage!

So you have a mortgage on your home or planning... Read More

Mortgage Loan Information - Know The Basics When You Refinance or Purchase a Home

If you are currently looking for a new home, chances... Read More

Types of Mortgages

Here is a useful guide to the different types of... Read More

Ending Your Private Mortgage Insurance Early

Private mortgage insurance, or PMI, is the safety net of... Read More

Bad Credit Mortgage Lenders - Things You Should Know About Subprime Lenders

Interest rates and fees vary between subprime lenders just like... Read More

Refinancing Your House - How to Know Whether to Refinance or get a Second Mortgage

Refinancing your house's mortgage is not the same thing as... Read More

Subprime Mortgage Loans Online - What To Expect

Applying for a subprime mortgage loan online can seem intimidating... Read More

Mortgage: Effective Household Investment for Financial Autonomy

If finances had a copyright, we would have bought it... Read More

How Not To Be Ripped Off By Mortgage Brokers

One of the things that bothers me about the mortgage... Read More

Mortgage after Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a Home Today!

So you have been through a bankruptcy and surely have... Read More

What is a Self-Certification Mortgage?

A Self-Certification mortgage is a mortgage designed for people who... Read More

A Mortgage Loan For Homes

Everybody wants to own a house because it is something... Read More

Understanding Fixed-rate Mortgages

A fixed-rate mortgage is a mortgage on which the interest... Read More

Which is Better? Fixed-Rate or Adjustable-Rate Mortgages

The answer depends on several factors including your financial situation.... Read More

What is a Home Equity Loan?

A home equity loan is a loan that is guaranteed... Read More

VA Loans, A Gift from Uncle Sam

Uncle Sam has a gift for the men and women... Read More

Sub-Prime Mortgage Company - 4 Signs of a Predatory Sub-Prime Lender

If you have bad credit and are looking to get... Read More

Fixed Versus Adjustable Rate Mortgages

Which One Should You Choose?Choosing between a fixed rate loan... Read More

Who Could Benefit From A Reverse Mortgage?

What is a "Reverse Mortgage?"Also known as a Home Equity... Read More

Secrets Your Banker Wont Tell You - Which Loan is Best for You?

Recently I was driving in my Car and I heard... Read More

Bad Credit Mortgage Refinance - Should I, Shouldnt I?

It is a common financial scenario across households in the... Read More

Home Mortgage Interest Rates: How to Compare

Whether you are looking to purchase your first home, sell... Read More

How to Get Cheap Home Loans with a Bad Credit

It's been years since you made any major improvements to... Read More

First-time House Buyers: to Buy or Not to Buy; that is the Question

Buying your first house is always a difficult time. There... Read More

Home Loan Refinancing - What Lenders Dont Want You To Know

Refinancing lenders seems to hold all the cards. They have... Read More

Money Smart Homeowners Use this Mortgage Strategy Every Time

There are currently more than 50 million home mortgages in... 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