Apr 4, 2008

Mortgage Loans

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Before settling on a lender, you should explore the terms available from several financial institutions. Mortgage loans is offered by commercial banks, savings and loans associations, mutual savings banks, mortgage companies, insurance companies, and individual lenders. The interest rates offered and the types of mortgage available will differ among these sources.

According to mortgage-mart, an online mortgage guide since 1995, the greatest expense you incur when you buy a house is not the cost of the lot or the structure, but it is the interest you pay on the mortgage. It is not uncommon for the interest charges to come to twice the actual selling price of your house. One quarter of 1 percent does not sound like much, but on a typical 30-year mortgage, it could mean a difference of thousands of dollars.

Because the rapid rise in prices and inflation, there has been a revolution in the types of mortgage loans that are available such as:

1. Variable interest-rate 30-year mortgages

2. Shared appreciation mortgages, where a lower-than-the-going rate is offered but the buyermust promise to give the lender a percentage of the profit when the house is sold. One complication here is that the lender is sometimes a legal co-owner and the owner may need lender approval before making major improvements.

3. Graduated payment loans offer buyers a low initial monthly payment that rises every year for five years or so and then levels off at an amount higher than the borrower would pay on a standard mortgage.

4. Mortgage that is renegotiated every three to five years to reflect current interest rates.

The alternatives in home financing today are many and before signing on the dotted line, you must understand the terms of the mortgage.
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