Taking the Plunge

Are you a first time home buyer seeking to enter the home buyers market, or perhaps a current homeowner looking to refinance or take out a second mortgage on your current home? There are plenty of good options out there for people looking for a mortgage loan.

Choosing your best option

With so many different mortgage options still available, home buyers and those looking to capitalize on equity they may still have in their home can find it difficult to determine which type of loan would be the best option. There are plenty of lenders around local communities and online writing mortgage loans. Depending on where you live in the world, you can find any number of options available to purchase your first home.

One consideration you will want to make, is truly evaluating how much mortgage you can reasonably afford. From what we've seen of the last few years, you probably want to realistically assess your financial situation so you can avoid making costly mistakes. Hindsight is, after all, always 20/20.

Research your loan, knowledge is power

If you are a first time home buyer, one of the standard rules banks used to employ, before lending and investing became not so strange bedfellows, was the general principle an individual could afford a mortgage loan of 2.5 to 3 times his/her annual gross salary, adjusting for other debt carried in relative proportion. A person who made $ 50,000 annually could afford a mortgage loan anywhere between $ 125,000 to $ 150,000, provided they were debt free and had no other monthly revolving debts to consider. The standard was what was standard in 1999 and that's the way we're likely to head back to.

More research, better options

If you have a down payment and good credit, you are very likely to still find a reasonable interest rate on the home you desire. Knowledge, after all, is power. If you are a savvy shopper, and do the research, you could save thousands capitalizing on special offers and offers. That said, be prepared to be comfortable with the risk that your investment might depreciate in value, as that's the trend globally. Though housing prices have shown signs of stabilizing in some areas, there are still substantial risks in paying too much for a home. Even those who think they negotiated a good deal will likely be unable to sell their home should interest rates rise and unemployment remain high.

If you want to buy a home, think of it AS a home. Consider how long term you are planning to stay before selling and moving up to a larger home.