An individual will go in for a house loan to pay for a new residence or to consolidate several debts and thereby ease his financial burden. Whatever the reason an individual goes in for a property loan, he must have some standard facts in hand prior to taking the plunge. Set aside a budget for the house which you may be comfy with, discover a house to suit this budget, discover how much you will need to borrow in order to finance your purchase and finally, how much the buy will cost by way of monthly payments.

It is always important not to stretch your budget to the limit but be comfortable with your payments. Many unforeseen tragedies can occur in the future like an accident that can render you incapacitated or loss of a job. Use a home loan calculator that can give an accurate estimate as to how much to borrow, interest rate and monthly payments. Most leading lending institutions will have a free home loan calculator available on their websites that customers can use to calculate home loan rates. Just enter the relevant information in the boxes provided and you will get an instant result.

Remember to shop about for various lenders so that you can get the top property loan. Your realty amount will depend on your present income, credit history, existing loans and interest rates. Here are some standard methods to go about searching for an excellent realty mortgage: - Uncover a real estate agent, get a great lender and then fill in the realty mortgage application. As soon as this is carried out, it is possible to get an estimate of closing expenses, interest rates, terms and conditions of the particular loan program that you simply have chosen. Next, compare the a variety of expenses of distinct lenders for those who have nonetheless not settled on 1.

 To be able to get the best realty mortgage, you should negotiate for a far better deal with the lenders. After you might be satisfied using the deal, present demand documents that they are going to ask for like salary details, address proof, credit history etc. Once the loan gets approved, the buyer will need to sign all of the essential loan papers. Give a check for the down payment quantity and your mortgage comes into impact and you can complete your transaction and possess your new property.

While a real estate agent can direct you to a good realty mortgage, it is better that you familiarize yourself with the different types of mortgages available so that no one can dupe you and you can make an informed decision. With this in mind, let us look at the different types of mortgages available for borrowers:
Fixed rate mortgage (FRM)
Adjustable rate mortgage (ARM)
Interest only mortgages
Balloon mortgages
Reverse mortgages

 ARM and FRM are the two basic mortgage loans offered. A fixed rate mortgage is appropriate for those having a steady income and who do not want surprises. The interest rate will remain fixed for the entire mortgage period and so will the monthly payments. Adjustable rate mortgage however is dependent on current industry trends. If interest rates are low then payments are correspondingly low and vice versa. This kind of loan could be suitable for those with lesser monthly expenses and those who can afford to speculate.

 Apart from this, the ARM attracts lower initial interest rates than an FRM. With the interest only mortgage, the borrower will need to pay only the interest amount for an initial fixed period and not the principal. As soon as the interest-only pre-fixed period ends, the monthly payments will shoot up considering that the principal will have to be repaid. This is valuable for those who really feel their future salaries can grow and expenses lessen. Balloon mortgages are normally taken for a 5-10 year time when small payments are produced throughout the period. 

Once the balloon period ends, the remainder of the mortgage will have to be paid. Many borrowers opt for this scheme and when the time for the balloon mortgage to end comes, they will either sell their home or go in for refinancing. Reverse mortgage is meant for senior citizens whereby the lender will pay the borrower every month a certain amount based on the value of the house, interest rates, age of the borrower etc. As long as the owner lives in the house, he receives payments. If he moves out, sells or dies, he or his spouse must either repay the full amount to the lender or the lender can take over the house.



Article by John Hoots of Chicago, who is a specialist in real estate investments. For more information on Chicago mortgage, visit his site today.