FaqsPlanet.com | Find Insightful And Informative Blogs

Home - Personal Finance - Types Of Home Loans And Tips For Getting One

Types of home loans and tips for getting one

A home loan is primarily a sum of money, which an individual borrows from a lender such as a non-banking financial institute or a bank at a pre-decided rate of interest. The home is regarded as collateral for the lender to grant a home loan. In case of such a loan, the lender has a legal right to recover the outstanding amount of loan via the sale of the collateral property if the borrower fails to repay the applicable dues in the decided tenure.

Types of home loans

Fixed-rate loan

In fixed-rate home loans, a pre-decided rate of interest is levied on the borrower. Consequently, a fixed amount through the life of the loan (principal amount plus the interest amount) has to be paid. Usually, the term of such a home loan is either 15 years or 30 years. A jumbo loan is a type of fixed-rate loan. Moreover, this is the most common type of home loan that borrowers take.

Who should apply for it?

This loan is particularly ideal for homeowners who desire predictability. In this type of home loan, you’ll be eligible to pay an X amount of loan for Y number of years, and that’s it. By the end of the Y years, your conventional loan amount would be paid in full. Under this loan mechanism, you’ll have to pay an initial down payment. Consequently, any rise or fall in the rate of interest would not affect your dues. So, at all times, you know what amount you need to pay to your lending agency every month. Having said that, a fixed-rate loan is perfect for people who hope to stay in their current home for a considerable number of years through the loan’s tenure. In case you believe that you will not be staying in this home for a long period, you should consider other types of home loans.

Adjustable-rate loan

Here, you’ll have to bear interest rates, which are ideally lower than a fixed-rate loan, for a stipulated period, which can be five or ten years, and not for the entire loan tenure. However, after the elapse of this stipulated time, your monthly payments and interest payments will change. The change occurs typically once a year and approximately corresponds to the existing interest rates. If the interest rates rise, your monthly payments will increase. In case the interest rates fall, your monthly payments will decrease.

Who should apply for it?

These home loans are ideal for homebuyers who have a low credit score because with a poor credit score they can rarely avail of a good rate with fixed-rate loans. Though adjustable-rates loans are affordable, ensure that the home loan sanction is within your reach. It is also an ideal loan type for people who intend to move out and sell their home before the interest rates go higher after the stipulated period.

Federal Housing Administration (FHA) loan

Typically, for availing home loans, you’ll have to pay a down payment, which is equivalent to about 20% of the value of the home. However, if you opt for an FHA loan, you can give a down payment that is as low as 3.5% of the value of the home. It is for this reason that FHAs are managed by the government.

Who should apply for it?

Homeowners that cannot afford to pay down payment should opt for FHA home loans. However, it is important to note that there are a bunch of guidelines associated with this type of loan. Firstly, there isn’t much flexibility. Also, you cannot get a loan of over USD 417,000. They are also fixed-rate home loans, which are given for a term of 15 or 30 years. The homebuyers who opt for FHA loans have to pay mortgage insurance either in the beginning or over the term of the loan. This insurance cost accounts to approximately 1% of the loan amount

Veterans Affairs (VA) loan

Anyone who has been a part of the military in the US is eligible for VA home loans. It is a convenient alternative to conventional home loans. Those who qualify for this type of loan can get a home with zero mortgage insurance and zero down payment.

Who should apply for it?

These home loans are applicable only for veterans who have associated with the army during wartime consecutively for 90 days, or a minimum of 180 consequent days during peacetime, or six years in the reserves. Since these home loans are backed by the government, there are fixed guidelines and requirements associated with VA. Further, the home for which the loan is taken must adhere to minimum property requirements and should be the primary residence.

United States Department of Agriculture (USDA) loan

A government-backed loan, USDA loan is ideal for families residing in the rural areas of the country. In this type of home loan, the government will finance the full price for all the homes that are USDA eligible. In simple terms, in USDA home loans, there is no need for a down payment, and the interest rate is also heavily discounted.

Who should apply for it?

If you reside in a rural area and are financially struggling, this loan can help you buy a home. Such home loans are peculiarly designed to ensure that the poor can afford homes. However, in this loan, at no time should your debt load supersede the money earned by you by over 41%.

Bridge loan

This loan is known as a repeat financing loan or a gap loan. It is an ideal choice of loan for people who are purchasing a home and simultaneously selling off their previous residential property. Under this, the lending company will wrap both the new and the current mortgage amount into one, and after the sale of the previous residence, you repay that amount and then refinance.

Who should apply for it?

It is ideal for people who have a good credit ratio as well as a low DTI, i.e. the debt-to-income ratio. People who do not require finance of over 80% of the combined value of the two homes should seek this alternative. It is a great way of transitioning into a new (possibly a bigger) home without any emotional or financial strain.

Ideas on getting suitable home loans

For home buyers, buying a home can be an exciting experience. However, finding your dream home is only the first step in the ladder. As much as deciding the home is important, you should also be careful in choosing the right home loan scheme. Here are a few tips to help you:

Save a good amount for your down payment

Now, depending upon the type of loan and the lender that you opt for, you’ll be required to pay a down payment, which could be as low as 2.25%, or as high as 20% of the value of the home. Thus, you need to have this amount. For this, you can prepare a monthly budget, and put away the requisite amount towards the down payment. After you have made your budget, it would be easier for you to put away the money every month for the down payment. You can also have this money auto-deposited from your bank account or a paycheck to a savings account. It will make it easy for you to set aside the money that you are saving towards the down payment every month. In case you fail to accumulate the requisite down payment, you can consider applying for FHA home loans, in which only a small down payment is needed.

Be aware of your credit score

People who have a good credit score have a better chance of getting a good deal on home loans. Therefore, even before you begin with the process of buying a home, get a copy of your credit report. It will give you an idea as to how your credit profile looks and where you stand. In case you have a low credit rating, start taking the necessary steps towards improving your credit score. A copy of your credit report can be availed every year by either of the three reputed agencies, i.e., TransUnion, Experian, and Equifax for a small fee.

Have all the documents required for the loan in order

When you apply for home loans, you’ll have to submit a bunch of documents. Once you have all these documents ready, and in place, it will quicken your application process of getting the loan. In general, you’ll be required to submit the following documents:

Current bank statements
Tax returns for the last two years
Present brokerage statements
Previous two pay stubs
Most recent W-2 form
Take help from a mortgage calculator

Before reaching a lending company, it is always good to use a mortgage calculator. These calculators are a great way to understand the amount of loan that you can afford. Most of these online calculators are easy-to-use and give you a fair idea about your monthly mortgage payments.

Compare home loans from different lenders

Not every loan offer would be the same. So, even if the loan has a similar rate of interest, the amount that you pay in full could differ. It is so because your payment is a composition of the principal amount, the interest amount, and certain additional fees. Now, banks usually have different applicable fees, which in turn, makes one offer pricier or cheaper than the other. Therefore, before you avail of a home loan, you should be aware of the different components, which are involved in the total loan amount. Once you do that, you’ll be able to make a more informed choice.

Keep a tab on interest rates

The most detrimental aspect of home loans is the interest rate. Do note that the rate of interest fluctuates every other day. Therefore, keeping a tab on this interest rate will certainly help you get the best home loan deals.

Try to be pre-qualified

For many real estate agents, you need to be pre-qualified for home loans before they associate with you. Well, the process of being pre-qualified is fairly simple. It would require you to submit your financial documents to the bank before applying for the loan. After you are pre-qualified for the loan, you have a better perspective about the price range for the homes that you can afford.

Be aware of different home loans

It does not matter whether your best friend took a 30-year loan at a fixed interest rate, or your colleague took a loan at the adjustable rate of interest. What matters is finding out, which of the available home loan options is right for you. For some people, the low-interest rate of adjustable-rate home loans is appealing, while for others, the predictability of fixed-interest home loans is desirable. The choice of every home buyer is different and depends on their personal and financial circumstances. Thus, you need to evaluate your situation, and then decide the type of loan that’s apt for you.

Be quick in your correspondence with the lender

Once you have applied for a home loan, you must be prepared with any additional information that the lender may require. Thus, whenever there’s a request for an additional document or information, you should be prompt in your response. The more time you take towards the submission of these documents, the more delay it would result in the approval of your loan.

Disclaimer:

The content provided on our blog site traverses numerous categories, offering readers valuable and practical information. Readers can use the editorial team’s research and data to gain more insights into their topics of interest. However, they are requested not to treat the articles as conclusive. The website team cannot be held responsible for differences in data or inaccuracies found across other platforms. Please also note that the site might also miss out on various schemes and offers available that the readers may find more beneficial than the ones we cover.

Types of credit card rewards and how to earn them

Don’t bite off more than you can chew

Latest Articles

The Causes And Symptoms Of Carcinoid Neuroendocrine Tumors

The causes and symptoms of carcinoid neuroendocrine tumors The neuroendocrine system can be described as a network of glands producing hormones that are carried into the bloodstream. There are different roles that these hormones play in the human body. The carcinoid neuroendocrine tumor is a very rare tumor that shows up in the cells of the neuroendocrine system. Around 80% of these tumors grow in the small bowel and the appendix. However, they can even grow in the lungs, pancreas, ovaries, stomach, testicles, and kidneys. These tumors develop at varied rates, and they are usually slow at developing. They might develop over several months and even years. Nevertheless, there are some tumors that tend to be highly aggressive. They can spread very quickly to other parts of the human body and can even result in serious issues. What are the causes of carcinoid neuroendocrine tumors? Experts are still not aware of the main causes of neuroendocrine tumors. However, there are certain conditions that might make you a victim of these tumors. These are called risk factors, and they are situations and diseases that you cannot control. Some of the most common causes of neuroendocrine tumors are as listed: Some diseases that are caused due to family history or genes passed to an individual through their family can increase their chances of having a carcinoid neuroendocrine tumor. Individuals with multiple endocrine neoplasia disease can be the victims of carcinoid tumors. This is a disease where tumors form in the cells, making hormones or chemicals that have a major effect on the actions of the body, such as sex drive, mood, and hair growth. Your age can have an effect on your chances of suffering from carcinoid tumors. There are certain NETs that have an effect on people of specific ages. The gender of an individual also has an effect on the risk for certain NETs. However, women have an increased chance of suffering from these tumors. The race of a person also has an effect on their chances of suffering from carcinoid tumors. The immune system in the body is its defense against all kinds of germs. Diseases or conditions that affect the immune system, such as organ transplant and HIV/AIDS, can increase the chances of neuroendocrine tumors in individuals. Excessive sun exposure can also result in neuroendocrine tumors. This is because the sun gives off ultraviolet rays that damage the skin DNA. This can result in the growth of cells in an uncontrolled manner, resulting in cancer. Studies have proved that smoking can also increase the chances of neuroendocrine tumors in people. What are the symptoms of carcinoid neuroendocrine tumors? Neuroendocrine tumors are generally diagnosed in people between the ages of 50 and 60. People with these tumors might experience certain symptoms, or they might not have any signs or changes in their body. The symptoms of neuroendocrine tumors include the following: Anxiety attacks High blood pressure Headaches A fever Rapid pulse Clammy skin Sweating Vomiting Nausea Heart palpitations Weight loss Flushing Severe diarrhea Wheezing Increased heart rate Appetite loss Sudden changes in blood pressure Always keep in mind that neuroendocrine tumors are rare and therefore the above-mentioned symptoms might be the result of other medical conditions. Nevertheless, it is important to consult a doctor if these symptoms persist for more than two weeks. What is the prognosis for carcinoid neuroendocrine tumors? If you go through carcinoid neuroendocrine tumor prognosis, you will be able to find that these tumors are either malignant or benign. The benign tumors tend to be small and can easily be removed completely, not to come back again. There are no symptoms produced if you are suffering from benign carcinoid tumors. The cells from these tumors do not spread to other parts of the body. The malignant or cancerous carcinoid tumors are large and can damage organs and tissues close to them. The cells of these tumors can easily break and enter the lymphatic system and the bloodstream to form new tumors. How can carcinoid neuroendocrine tumors be prevented? There is no way of preventing these tumors at present. However, quitting or not starting to smoke might reduce the risk of these tumors. It is important to maintain a healthy and balanced diet and a good lifestyle in order to prevent such tumors.

An Overview Of Cla Safflower Oil

An overview of CLA safflower oil CLA stands for conjugated linoleic acid. It is high in good fats, i.e., monounsaturated fats and polyunsaturated fats. According to the National Institutes of Health, typically, CLA is found in foods like beef and dairy. However, it can also be found in small quantities in vegetable oils. Safflower oil is a oil produced from the seeds of a safflower plant; thus, it is a vegetable oil. Safflower plant is about 30 to 150 cm in height and each branch of the plant has about one to five flower heads with 15-20 seeds per head from which the oil is extracted. The plant is found in Kazakhstan as well as India, the USA, Mexico, and Argentina. Below is some information about CLA safflower oil. What are the advantages of using CLA safflower oil? The CLA safflower oil is a rich source of unsaturated fatty acids, namely, polyunsaturated fats and monounsaturated fats. These fats, commonly known as good fats, are required by the body to function well. The CLA safflower oil helps in improving memory and aids hormone regulation. This oil allows the body to absorb fat-soluble vitamins like vitamin K, E, D, and A. CLA safflower oil reduces inflammation in the body and also improves general health. It is a good way to regulate blood sugar levels in the body. Regular intake of CLA safflower oil improves blood cholesterol levels, thereby, reducing the chances of any kind of heart diseases. It contains vitamin E, which is great for skin issues like dry skin or even inflamed skin. However, you must perform a patch test before applying the oil all over the skin. How do you use CLA safflower oil in diet? The moderate use of safflower oil in your food will improve your metabolic rate, thereby, reducing your weight. The proportion of safflower oil intake would be dependent on weight-loss calorie requirement. For instance, a woman who needs to have 1200 calories daily would need 4 teaspoons of the CLA safflower oil. Men who are on a diet and need to consume 1600 calories would need 5 teaspoons of it. What are the side effects of CLA safflower oil? Most often people do not face any side effects from this oil if it is consumed or applied in recommended proportions. CLA safflower oil thins the blood so it could slow down clotting and could increase the chances of bleeding for those who have bleeding disorders or are undergoing some sort of surgery. People allergic to ragweed or pollen should not consume this oil as it could lead to an allergic reaction. Pregnant women should avoid it. Which are the best safflower oils of the year? As per CLA safflower oil reviews, the following brands have made the list of favorites among consumers this year: Renewalize Organic Safflower Oil – This is a USDA-certified brand and it is high in oleic acid. Renewalize Organic Safflower Oil is extracted using the cold pressed method that allows it to have a high amount of oleic acid, which is great for hair growth. Hollywood Safflower Oil – This is a great oil for cooking. It is the best when it comes to light heat cooking. The Hollywood Safflower Oil is available in a pack of one, three, or twelve, and it works well for pasta and as a drizzle over appetizers. It is good for cake mixes as well. Eden Unrefined – This brand of CLA safflower oil is organic and kosher, and it only has safflower oil. It works well for acne-prone skin and for cooking too. Dr. Adorable One Gallon – If you want to use CLA safflower oil especially for body massages, then this brand works beautifully as it blends well. You can take a generous quantity and apply it all over the body. It has no noticeable smell. However, this oil should be only used for external purposes. Spectrum Naturals High Heat – This brand produces the perfect CLA safflower oil for cooking. It has a smooth flavor that is ideal for cooking. The Spectrum Naturals High Heat does not have any artificial coloring, genetically modified organisms (GMOs), and other common allergens. It is much lighter than other oils, such as olive oil.

Top 10 Health Benefits Of Safflower Oil

Top 10 health benefits of safflower oil Safflower oil is an oil that is extracted from the seeds of the safflower. CLA stands for conjugated linoleic acid. CLA is a type of polyunsaturated fatty acid. The CLA safflower oil has a number of health benefits; hence, it is being used as medicine by many people. CLA safflower oil can be used for treating a number of health issues and it is also used as a cooking oil. Continue reading if you wish to know more about the amazing health benefits of safflower oil, its side effects, and more. What are the health benefits of safflower oil? It is believed that safflower oil helps in boosting the immune system. This oil has properties that can protect the body from any kind of infections and it is considered to boost immune health. The CLA safflower oil is good for your heart’s health. When you are having heart-related health issues, your doctor will usually suggest you maintain a balanced diet, and it is important to keep it natural. Safflower oil is a natural oil that has omega-6 fatty acids, which are good for a healthy heart. The cholesterol levels of the body are also maintained using this oil. CLA safflower oil helps in losing weight. Shedding those extra pounds is not a simple task and you need to do a lot more along with exercise. Safflower oil is very good for healthy and shiny hair. If you are having dull, damaged, and dry hair, then this oil can be very helpful. Just massage a few drops of this oil into your scalp and it would increase the blood circulation in your scalp resulting in strong hair. When you have strong hair, why not have flawless skin? Yes, there are a number of products available in the market for flawless skin, but how many of them guarantee long-lasting results? Safflower oil can do that for you. You can check the CLA safflower oil reviews for skin and you will find the best reviews about this oil. It is good for joint pains as well. Massaging is one of the best ways to get rid of joint pains and massaging with safflower oil is a good option for better results. Diabetes is a health condition that needs to be treated with the right medicine. According to many studies, the omega-6 fatty acids are considered as the best option for controlling sugar levels in the body. It is also good for treating a migraine headache. Any health problems related to respiration can be treated using this oil. Menstrual pain and cramps in women can be treated with the help of this oil. Are there any side effects of safflower oil? There are no side effects of using safflower oil when used in moderation. This oil is strong and can cause irritation, so do not use it directly. You need to dilute with any carrier oil before you actually use it. What is the dosage of safflower oil that is good for your health? The dosage of CLA safflower oil usually depends on what kind of health issue you are treating. If you are using it to help reduce weight, then you can use it as cooking oil for at least six weeks. For this, you should consume at least one and a half teaspoons of this oil on a daily basis. How should safflower oil be stored for better results? Safflower has to be stored always in a dark place in an airtight container. Safflower oil can be kept in the refrigerator. In order to reduce the chances of oxidation, you should make sure that minimal air and light reaches the containers in which the oil is stored. You need to use the oil in just one or two months after you open the packing or oil tin.