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Effectively Negotiating a Mortgage Loan

Nov 30, 2007
Get hold of a home mortgage if you are a first time buyer. As with any other loan type, you will have to pay an interest. The most important factor to consider when securing a home loan is the cost of the loan.

If you want to get a good rate on your home mortgage, you will need to look into the many factors that can raise or reduce your costs. Take a look at some of these factors:

THE LOAN TYPE
There are many loan products out there that you could avail of. There is the fixed rate mortgage, the adjustable rate mortgage, the balloon mortgage, the interest-only loan, and the graduated payment mortgage loan. In each of these loan types, the main aspect that differs is the way in which you pay your interest.

So, if you are looking for a loan with a fixed monthly payment, but can put up with a higher interest rate, take up a fixed rate mortgage. If you don't mind an interest rate that can rise in the future, though it is currently low, go in for the adjustable rate mortgage. In interest-only mortgages and balloon mortgages, you pay only the interest during the loan period.

Once the duration of the loan is over, the principal can be paid off. In a graduated payment mortgage loan you pay lesser loan installments in the initial period of the mortgage. The installments will increase as the term carries on.

MAKING PAYMENTS BASED ON THE LOAN TYPE AND YOUR INCOME
Once you have decided on the type of mortgage you want, estimate the expenses that you would incur very month. The monthly mortgage payments will depend on the type of loan that you take. So take one based on how you would prefer to make repayments. You should take into account your income level and other expenses and see which kind of mortgage would suit you best.

COMPARE RATES
Thereafter you will have to look out for the rates that are being offered. Read reviews before you pick a lender. Look up websites and online lenders and see what you can find.

OTHER FACTORS
The loan amount that you take and the loan period will also determine your mortgage expenses. The shorter the loan period, the lesser you will be paying in interest and the quicker you will pay off the loan.

You will have to think about other factors like the amount of down payment as well. If you want a low down payment, you would have to ask the lender and find out if they have programs in place for such specifications. Closing cost is yet another factor that you need to consider when taking to your mortgage lender. Are their closing costs too much for you? Is there any loan program with reduced closing costs available?

SUMMARY
Make sure you do a lot of negotiating with your lender. This is essential if you want to end up with a good mortgage loan. The loan type, loan amount, closing costs, and so on will decide the cost of your home mortgage. These should come within your income level. Explain your financial situation to the lender to find out which loan product will suit you.
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