Dallas Auditor .com

Most people who dream of buying their own house usually look to financing to help themselves own a home. But owning a home isn’t as simple as shopping around for a house, applying for a loan then paying off the mortgage. Even as banks and lending institutions are aggressively attracting customers by offering lower interest rates, you should still give this enough thought before making a final decision.

It is best to also shop around for the different kinds of loans available. People buy homes for different reasons and you should evaluate your own as well as your needs and preferences to make sure you choose the right housing loan.

Are you a low-income house hunter?

If you’re having problems getting a loan because your income doesn’t qualify you for it, then maybe a temporary buydown is best for you. A temporary buydown is a loan that’s meant for low-income people who are expecting an increase in income soon.

There are two popular types of temporary buydowns — 3-2-1 buydown loans and two-to-one buydown mortgage. In the former, the loan’s interest rates increases by one point a year for the next three years, and then stays the same for the rest of the loan’s duration. In the latter, the interest rates increases by one point for the first two years only.

These types of loans need the borrower to spend a bit more money at the early part of the loan duration. These little sacrifices are needed for you to be awarded the credit.

For those looking for temporary housing

If you want to own a home, but you’re not sure you’ll be staying in any one place for good, then the best loan for you may be the delayed adjustable rate mortage (or delayed ARM). Delayed ARM’s are suitable for individuals who move between cities frequently, or those who plan to sell their homes after paying for them completely.

When you take out a delayed ARM, you’ll be paying fixed monthly payments longer than temporary buydowns. For example, if your delayed ARM is 5-1, then the interest rates won’t change for the first five years. It will only change on year six onwards. The change will depend on market conditions and your agreement with the lender.

Are you looking for a home to spend the rest of your life in?

If you have no plans of moving or plan on staying in your home for the remainder of your life, you can go for a fixed-rate mortgage. Fixed-rate mortgages mean just that - fixed. Your interest rates and monthly payments remain the same throughout the life of the loan. If you can get a low interest, so much better because your payments don’t increase even if market rates do.

There are 30- and 15-year fixed rate mortgages available. You end up paying the same amount of money in bo h schemes, but a 30-year mortgage will obviously have lower monthly payments.