July 14th, 2014 11:04 AM by Jackie A. Graves, President
The first thing to understand about buying a house is
that you don't have to have all the cash saved up in order to make your
The good news is that there are folks out there who
will lend as much as 95 percent of the purchase price of your home, at very
favorable interest rates. Furthermore, they are willing to spread out the
payments over a long period of time so that you can afford the house you want.
Just to cover the basics, let's elaborate on the points
in the last paragraph:
If you have a steady job and a reasonable credit
history, there is a good chance that you can find a home lender who will lend
you most of the purchase price of your new house. Home loans are also called
"mortgages," which comes from a Latin phrase meaning "pledge
unto death." While lenders don't take your promise to pay quite that
seriously, they DO expect to get repaid on time. Just to make sure you
remember, lenders take an ownership interest in your house until the loan is
paid in full.
Home loans typically are offered in amounts of 80
percent, 90 percent and 95 percent of the price you are paying for the house.
You are expected to pay the remaining amount in cash from your own savings. As
you might imagine, the lower percentage loans are somewhat easier to qualify
The reason the lender is willing to lend you up to 95
percent of the value of your house is that history has shown real estate to be
such an excellent investment. Lenders expect that your home will be worth more
in the future than it is today - so their investment in your home is considered
That's also why the interest rate you can obtain on a
home loan is one of the best around. Consider that America's largest and
strongest corporations borrow at what is called the "prime rate," and
that today you can borrow a home loan - fixed at the same rate for many years -
at substantially less than the prime rate. Lenders have found that home loans
tend to be excellent investments, and you benefit every month when you make
your loan payment.
Finally, home loans are available to be repaid over
terms of usually 15 or 30 years. The shorter term loan offers a slightly
lowered interest rate, so if you can afford the higher monthly payments, you'll
save in interest costs by choosing the 15 year loan. At today's interest rates,
a 15 year loan costs about 27% more than a 30 year loan in terms of your
monthly payment. But the amazing thing is that lenders are even willing to
offer a fixed rate loan for that time period. It's better financing than you
can get on just about any other investment.
By John Adams – To view the original article click here