For many people, the idea of a loan that lasts for decades is intimidating, and unfortunately entering the intricate world of mortgage loans is frustrating as well. Before stabbing blindly at a list of banks and lenders in the phone book, however, it is important to educate yourself about the basics of mortgages.
Types of Mortgage Loans
There are many different types of mortgages, and which type you secure depends on the type of property you are financing as well as your specific financial circumstances. For example, if you have poor credit or a significant amount of debt, you may be interested in bad credit loans or debt consolidation. Whereas if you are just starting out, you may need to investigate mortgage loan leads before deciding on the right loan for you. Even if you are only interested in a new commercial mortgage loan or a second mortgage, it is a wise decision to learn about the differences between your options so you can find the best deal.
What Affects Mortgage Loans
Certain factors will affect the interest rate, monthly payments and conditions of your mortgage, including:
- Your credit history and available credit
- The available down payment
- The specific type of loan you are securing
- The term, or length of time the loan will take to be repaid
- The principal loan amount
Specifically how each of these numbers will affect your loan varies depending on the conditions each lender prefers. Using a mortgage calculator can help you gauge which variable will be the most significant for your type of mortgage loan.
Before Choosing a Lender
To find the best mortgage loan for your circumstances, it is best to prepare yourself before approaching a specific lender. Educate yourself about different types of mortgages, pay off credit card or other substantial debts to build a better credit history, and save up a reasonable down payment. Many prospective homeowners try out several mortgage calculators to get an idea of how each number fits into the overall mortgage equation before speaking with a lender. Each of these steps can help you feel more confident when meeting with a loan consultant, and you will not be lost in unfamiliar terminology and complex calculations.