Homes, land, boats and vehicles can all be purchased using several financing options. The most widely used method is by taking out a mortgage loan to cover the cost and then making monthly payments. If you have never had a mortgage you may have a few questions or concerns before making the decision to purchase. To put your mind at ease this article will cover what you need to know about Mortgages Harrisonburg.
Mortgages are substantial loans made to buy homes, land and other expensive properties. The item being purchased stands good for the money borrowed and is called collateral. The value of the property must meet or exceed the amount of cash borrowed. The loan will be given with an interest rate attached and will be either a variable rate or fixed rate.
A fixed rate loan has interest rates that do not change over the life of the home loan. This can be good for the new homeowner as it allows them to create a budget and make the payments with no stress. It also helps the creditor as fewer payments may be missed.
Variable rate interest changes from time to time depending on the credit market index. This type of rate is also referred to as Adjustable Rate Mortgage (ARM). They begin with an initial interest rate that runs for a certain amount of time called an adjustment period. At the end of the adjustment period the note will be recalculated using the market index to arrive at the new interest rate and monthly payment amount.
At first glance you may wonder why anyone would want a rate that could fluctuate and vary the monthly payments. The answer is that most adjustable rate mortgages allow the borrower to have lower initial payments because of a lower introductory rate before the note is recalculated. This enables the new homeowner to settle into making payments and maintain a comfortable standard of living.
Mortgage contracts contain Loan Caps. The Initial Adjustment Rate Cap is the recalculation after the fixed term is over. It will vary depending on the length of the initial fixed terms. The Rate Adjustment Cap states the maximum your ARM can increase at one time to deter sudden sharp increases. Lifetime Caps state how much the rate can change above the start rate over the lifetime of the note.
Being properly prepared before going to lenders is very important. You will have to provide your tax returns, bank statements and other vital documents ready for lenders. Also, anyone considering home ownership needs to asses their finances to see if they can afford the monthly payments and assorted fees that come with the package. There will be closing costs that will equate to about 4% of the loan amount you must pay.
Owning a home the goal of many individuals and it is a gratifying experience. Although you may not understand everything now your loan officer will quickly get you acquainted with the process. Getting prior approval for mortgages Harrisonburg will show that you are a motivated buyer with the financial backing to actually purchase a home.
Mortgages are substantial loans made to buy homes, land and other expensive properties. The item being purchased stands good for the money borrowed and is called collateral. The value of the property must meet or exceed the amount of cash borrowed. The loan will be given with an interest rate attached and will be either a variable rate or fixed rate.
A fixed rate loan has interest rates that do not change over the life of the home loan. This can be good for the new homeowner as it allows them to create a budget and make the payments with no stress. It also helps the creditor as fewer payments may be missed.
Variable rate interest changes from time to time depending on the credit market index. This type of rate is also referred to as Adjustable Rate Mortgage (ARM). They begin with an initial interest rate that runs for a certain amount of time called an adjustment period. At the end of the adjustment period the note will be recalculated using the market index to arrive at the new interest rate and monthly payment amount.
At first glance you may wonder why anyone would want a rate that could fluctuate and vary the monthly payments. The answer is that most adjustable rate mortgages allow the borrower to have lower initial payments because of a lower introductory rate before the note is recalculated. This enables the new homeowner to settle into making payments and maintain a comfortable standard of living.
Mortgage contracts contain Loan Caps. The Initial Adjustment Rate Cap is the recalculation after the fixed term is over. It will vary depending on the length of the initial fixed terms. The Rate Adjustment Cap states the maximum your ARM can increase at one time to deter sudden sharp increases. Lifetime Caps state how much the rate can change above the start rate over the lifetime of the note.
Being properly prepared before going to lenders is very important. You will have to provide your tax returns, bank statements and other vital documents ready for lenders. Also, anyone considering home ownership needs to asses their finances to see if they can afford the monthly payments and assorted fees that come with the package. There will be closing costs that will equate to about 4% of the loan amount you must pay.
Owning a home the goal of many individuals and it is a gratifying experience. Although you may not understand everything now your loan officer will quickly get you acquainted with the process. Getting prior approval for mortgages Harrisonburg will show that you are a motivated buyer with the financial backing to actually purchase a home.
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When you want to find affordable mortgages Harrisonburg home buyers should visit the web pages at www.cofcu.org today. You can see details on terms and rates at http://www.cofcu.org now.
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