What Type of Home Loan Should You Consider?

There has never been a better time to consider buying a home than now. In light of the current financial crisis the price of homes has dropped considerably around the nation. The current home prices are at or below the year 2003 level prices. Banks are sitting on billions of dollars in reserve funds and they are just waiting to lend it out to someone that is qualified. After all if they are not lending then they are not making money.

Home mortgage loans are harder to get since the entire sub-prime lending “crash” happened. Banks are no longer willing to lend to anyone anymore and they are being a little more cautious with who they lend to. This does not mean if you have less than perfect credit you cannot qualify for a home loan, it just means that the process is taking longer and banks are being more selective with whom they make home loans with.

The government has certainly enacted some laws that make it easier for people to obtain a loan, and for banks to start lending again. There are also many incentives for both borrowers and lenders to come together and purchase homes on the market place.

Home Equity Loans

Do you own a home? Do you know how much it is worth and how much you owe on it? I am sure you do, people pay close attention to these types of things when times are tough. Home equity is great to have for many reasons. But first, what is ‘home equity’? Home equity is when you owe less on your house then what it is worth. The lender allows you to take out a home equity loan up to the difference of your loan amount and what your home is worth.

There are several reasons why you may consider doing this:

• Debt consolidation (pay off some bills)
• Finance an Education
• Home improvements or renovations
• Obtain another property

It really is best to avoid taking out a home equity loan, but these are some circumstances that may arise where it makes sense to borrow against the equity in your house.

FHA Home Loans

The FHA stands for the Federal Housing Administration. This program helps would be home buyers get into their first home. The FHA offers many great opportunities for first time home buyers such as a low interest rates, grants for a down payment on a home, and cheap interest rates on refinancing offers. FHA Home loans are the best place to start when looking for a new loan; they offer a ton of educational training and professional services.

Interest Rates on Home Loans

The current interest rates on home loans have come down considerably since September of 2008 when the sub-prime lending mess officially began. The average 30-year fixed rate is at 5.44% nationwide, while the average 15-year fixed rate is 4.83%. In many cases it is easy to find lenders willing to lend at less than 5% interest rates if you have exceptionally good credit and not a lot of debt.

Poor Credit Home Loans

It can be much more difficult to obtain a home loan when you have poor credit. There are some solutions that may be able to get you into the home of your dreams. When applying for the loan and going through the interview process it’s a good idea to explain why you have poor credit, and explain that it no longer exists (assuming it actually no longer exists, don’t lie).

If this does not work, there are high interest rate loans available that can help you establish credit again and move into your new home. Once you have gotten your poor credit home loan and you have made all of your payments for a year or two, banks will be more inclined to refinance your mortgage and lower your interest rate.