Fixed rate mortgage loans have a stated interest rate that does not change over the life of the loan. The mortgage rate and payments remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change. Converse to fixed rate mortgages, adjustable rate mortgages (ARM’s) are linked to an index and change as the index rate changes. The main advantage of a fixed rate mortgage loan, explains Gateway Funding, is that the borrower is protected from sudden and potentially significant increases in monthly mortgage payments if interest rates rise.

These types of loans won’t suit all borrowers but are particularly popular with first time home buyers looking to ensure they keep their mortgage payments steady for a set period. Fixed rate loans also offer the option to refinance if interest rates decrease and may be the right loan if you are planning to be in your house for many years.

If choosing a fixed rate loan, you also need to consider the term of the loan, which is usually 30 to 15 years. Other fixed rate options include loans that are fixed for the first three, five, seven or ten years of the loan and then become variable once the fixed terms are up. Once the Fixed Rate period is finished, your loan will return to an adjustable rate mortgage (ARM) with rates that vary. You should consider this when looking at a potential lender. If lenders you’re looking into historically have higher variable interest rates compared to other lenders then you could end up paying more for your mortgage loan.

In today’s market, fixed interest rates can vary. Depending on which lender you choose to work with and the amount you’d like to borrow, it would be worthwhile spending a lot of time looking at many lenders’ fixed mortgage interest rates. A 1.5% difference in interest rate payments can be substantial, especially if you are a first time buyer who is trying to save as much money as possible.

The threat of rising interest rates has pushed more borrowers towards fixed rate mortgage loans. If you take the time to browse some of the home loan options that are available and have a look at both the fixed rate loans and the variable rate loans, you will be able to get a clearer idea of which loan suits you best.

Flexibility is a concept rather than a specific mortgage type explains Gateway Funding. It is possible to have a fixed rate that is flexible or a discount that is flexible. There is no defined standard of what makes a mortgage product flexible. However, when seeking a flexible deal we would advise that you look for the following features explained by Gateway Funding Diversified Mortgage Services.

- Interest calculated daily – The ability to overpay the mortgage on a regular basis – The ability to underpay the mortgage on a regular basis – Able to make Lump sum payments – Possibility of running a current account within the mortgage – Ability to take payment holidays – No early redemption penalties

Advantages

- More control over the mortgage and if used proactively, can dramatically reduce the number of years you have a debt. Excellent for people who are paid irregular salaries such as commission earners and the Self-Employed.

Disadvantages

- Flexible mortgages don’t always have the cheapest rates so usually one needs to be in a position where overpayments are a reasonable certainty to get the most out of this type of product.

Having the ability to regularly overpay your mortgage does not in itself justify choosing a flexible mortgage. Lender’s offering flexible and offset facilities will demonstrate how additional payments will significantly reduce your mortgage term and this is true but, it must be remembered that a standard repayment mortgage with a cheaper rate will often work out better in these circumstances says Gateway Funding.

Flexible and offset mortgages certainly have value but hopefully you can see that they are not always the best way of repaying a mortgage early!

Certainly where flexible and offset mortgages score heavily is in the additional features such as being able to accept ad-hoc overpayments and also the ability to link other savings/current accounts so that the balances offset the mortgage explains Gateway Funding. This is particularly useful for higher rate tax-payers as interest earned in traditional savings mediums (bank and building society accounts) will often be subject to 40% tax whereas conversely using such balances to reduce the interest accruing against the mortgage does not incur any tax liability.

Reserve funds are another brilliant feature of many flexible mortgages where the borrower is able to create a borrowing facility which can be drawn down for future needs. This means that you will only be paying for the money you need as and when you choose to take it.

There are many types of mortgages, and the more you know about them before you start, the better says Gateway Funding. To compare one adjustable rate mortgage with another or with a fixed-rate mortgage, you need to know about indexes, margins, discounts, caps, negative amortization, and convertibility. You need to consider the maximum amount your monthly payment could increase. Most important, you need to compare what might happen to your mortgage costs with your future ability to pay.

FIXED RATE MORTGAGES

In a fixed-rate mortgage, your interest rate stays the same for the term of the mortgage explains Gateway Funding. The main advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it.

Benefits and Advantages:

- Low rates for the full term of your mortgage

- Security of a fixed monthly payment for the life of you loan, regardless of fluctuations in interest rates

- More stability may give you peace-of-mind

Disadvantages

- Higher initial monthly payments compared to those of adjustable rate mortgages

- Less flexibility

ADJUSTABLE RATE MORTGAGE (ARM).

With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed-rate mortgage says Gateway Funding. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index. Throughout the life of that loan, the principal and interest payment will adjust periodically based on fluctuations in the interest rate.

Benefits and advantages:

- Lower Initial payments due to lower beginning interest rate

- Ability to qualify for a higher loan amount due to lower initial interest rates

- Lower interest payments if the interest rate drops over time

- Interest rate caps limit the maximum interest payment allowed for the loan

Disadvantages

- Your future monthly payment is uncertain.

- Initial lower interest rate and monthly payments are temporary and apply to the first adjustment period. Usually, the interest rate will rise after the initial adjustment period.

- Higher interest payments if the interest rate rises over time

SUMMARY

A fixed rate mortgage will offer you the security of knowing that your mortgage interest rate will not change during the term of your fixed rate. The advantage of an adjustable rate mortgage is that you may be able to afford a more expensive home because your initial interest rate will be lower says Gateway Funding Inc. A fixed rate mortgage applies the same interest rate toward monthly loan payments for the life of the loan. Fixed rate mortgages are more straightforward and easier to understand than ARMs. They are more secure for the buyer and they are very popular with first-time home buyers. Since the risk to the lender is higher, fixed-rate mortgages generally have higher interest rates than ARMs. A fixed rate mortgage is ideal for anyone who likes to budget monthly expenses and plans to keep their home for several years according to Gateway Funding.

The availability of Gateway Funding home loans is in full bloom. They are uncomplicated, tenable, easily available, very flexible and tailor-made for homeowners. Home loans are like omnipresent and yet encountering the requisite home loan is like a Gordian knot. Sometimes innumerable alternatives have the obvious effect of leaving you irresolute of which home loan to settle for.

Low interest rates, low APR, flexible loan terms, credit history not taken into account – you have heard all that before in context of home loans. As a layman you don’t understand that enough. But you absolutely need a home loan. So where do you begin – with the meaning of home loan? That is perhaps the right place to start. Home loans are loans taken against your home and more often referred to as mortgages explains Gateway Funding. In a home loan, your home is your personal guarantee for the money that you are taking. The value of your property must have increased enormously since the time you bought this house. A home loan implies drawing on this value of your property to get to you the financial assistance that you need.

Home loans are available in all configurations and contours. You won’t find any more modifications anywhere except with home loans. Home loans are obtainable in the form of adjustable rate home loans, fixed rate home loans, balloon rate home loans. Do your homework and speak with your Gateway Funding Loan Officer before you make your judgment about the home loans that is right for you, your future financial picture.

Fixed rate home loans are perhaps the most frequently used home loans by homeowners everywhere. The interest rates on home loans are fixed or rather stable. The interest rates that you settle on will be the same rate that you pay for the entire home loan term whether it is 15 year or 30 year. Fixed rate home loans are inflation resistant. An increase in the loan rates or taxes or insurance costs won’t affect your home loan payment. Fixed rate home loans are low risk home loans. Since you are aware of your monthly income before hand, you are free to sketch long term financial goals.

Adjustable rate home loans start with low interest rate and low monthly payments. Adjustable rate home loans imply that the interest rate can change during loan term which will either increase or decrease your monthly payment. It is an unpredictable situation. Adjustable rate home loans have adjustment periods that will decide how often the interest rates will change. The popularity of this home loan lies with the fact that it start with low interest rates.

Balloon mortgage are based on a 30 year repayment plan which after 5 to 7 year term you can either repay the entire mortgage or reset the entire home loan. Balloon mortgages are again of two types – 7/23 and 5/25. The 1st number (7 or 5) is the number of years before the balloon maturity date. The 2nd number (23 or 25) is the balance of the term.

Home loans interest rate is dependent on your credit status says Gateway Funding. This simply means that the interest rate on your home loan will be high if your credit history is faulty. Poor credit score won’t prevent your odds at finding the home loan but it will certainly have impact on the interest rate. Down payment is another interest oriented term. The more the down payment, the lower will be the interest rate. Don’t hesitate to ask questions about your home loan and make sure you completely understand the terms and conditions.

Another factor is debt-to-income ratio. It is the amount you make each month as compared to the amount of your monthly debt. Finding a good home loan lender is also crucial. Pre qualifying for the home loans will negate the tediousness associated with the process of getting a home loan. Talk to Gateway Funding to know the best home loan that befits your motives.

A ‘right home loan’ is not an idealistic phrase. On the contrary it is not only realistic but also has the ability to save a lot of money over the term of your home loan. Savings on home loans makes sense to every homeowner. A home loan makes sense for every homeowner.

With interest rates near historic lows many people are ready to buy their first home. Buying a home is a huge decision and there is a lot to learn before you start shopping for your dream home. Being prepared for what’s to come will help make the process easy and painless. Here are some things  from Gateway Funding  Inc to keep in mind before you apply for your mortgage:

1. Learn the lingo – There are many different types of mortgages out there and each offers unique benefits. Learn the basics about fixed-rate, adjustable-rate, FHA & VA mortgages. Understand how mortgage interest rates impact your monthly payment. Get to know more about points and PMI as well recommends Gateway Funding.

2. Determine what you can afford – Use a Gateway Funding mortgage calculator to figure out what you can afford including taxes and insurance. Consider making a higher down payment, if you can afford it, as it will reduce your mortgage payment.

3. Select your lender carefully – Make sure you use a trusted lender like Gateway Funding Diversified Mortgage Services. Look for solid credentials and only deal with a reputable company.

4. Don’t open accounts – Don’t even APPLY for new credit cards, store accounts or any other lines of credit. Doing so could alter your credit report and have an impact on the type of loan you’ll be able to receive.

5. Don’t close accounts – Keep all of your active accounts, even the ones with a $0 balance, open. Existing accounts maintain a credit history. The longer your credit history; especially with a good payment record, the better. Continue to pay down debt, but don’t close the accounts.

6. Don’t quit your job – Stable employment history is important. It is best if you have been employed at the same job for at least 2 years. If you haven’t, you may still be able to qualify, but stay at your job if you can help it.

7. Pay your bills on time – Avoid late payments as much as possible to avoid being denied a home loan or having to pay higher interest rates. Late payments reduce your credit score which has a direct impact on your mortgage.

Buying your first home is an exciting moment in your life. It is also a big decision. If you follow these tips from Gateway Funding, you can be more prepared to apply, get pre-approved and close your mortgage. Make sure you choose the right mortgage company that will work for you. If you can do all of these things, you’ll be a home owner in no time.

Securing a home mortgage loan can be tough unless you know the basics. A home mortgage loan is one of the most common and popular ways through which people buy property. Most properties in the Unites States are bought with the help of a loan and the industry is in itself worth billions of dollars. However, there are several steps before one can actually be approved for a home mortgage loan says Gateway Funding.

Home mortgage loan

The concept of a home mortgage loan itself is generally quite simple. The property in question remains as the mortgage or the collateral, for the loan being issued. This is usually issued by a financial institute to the person who is buying the property. The original amount of loan remains the principal sum with an annual interest rate imposed on this sum explains Gateway Funding. Should the new property owner be unable to pay the loan, the lending institute seizes the property which then will be foreclosed. Home mortgage loans are usually paid in installments every month.

Key elements

If you are planning to buy a home or any property through a home mortgage loan, it is advised you work on your credit score long before you actually plan to make the big move says Gateway Funding Inc. Your credit history is like a research paper on your personal finances and to any lender it speaks volumes about how well you manage your finances and how good you are at clearing your dues. It is usually very difficult to get approved for a home mortgage loan if you have a bad and sometimes even average, credit score. Also consider the fact that things could be somewhat easier if you are able to make a down payment on your property. Larger the payment, better it is.

Financial realization

Before you even begin to apply for a home mortgage loan, you must do some work on your own to get an idea of what your chances are in being approved that loan. Gateway Funding can help with the process. Naturally, the first and most important element of the process is realizing your personal or household’s finances. Calculate how much money you are left with every month after you deduct all the fundamental expenses. This is important because it gives you an understanding of how much money you are left with at the end of month which in turn determines how much mortgage you can pay monthly. Don’t forget to anticipate the interest rates.

Documentation to secure a home mortgage loan

When you think you’re ready to go for it, make a check list of documents you will need for your home mortgage loan application process. If you are employed, you will need your W-2 form and pay stubs and if you are self employed then you would generally need to show your tax statements of about two years. Private business owners need to show a balance sheet depicting the revenue and loss you have incurred. Retirees need to have either a two- month long bank statement or the 1099 form. The social security award letter along with copies of all documents related to your pension checks is required too. Then of course there are other basic documents you will need pertaining to your bank and credit card accounts, existing loans and also on the present landlord and investments if applicable. These are the basic documentation required to be eligible for most Gateway Funding home mortgage loans.

With so many new rules in place this year, qualifying for a mortgage can be more difficult than ever but that does not mean it’s impossible; especially with the help of your Gateway Funding Mortgage Officer’s help. If you are serious about buying a home, there are some things you should start doing now that will benefit you later when it comes time to visit the bank. Even if you have had a bad run with credit in the past, these tips can get you on the road to approval.

The very first thing you need to do is clean up your credit explains Gateway Funding. By getting a copy of your credit history, you can go through each item and see what is legitimate and what is not. The details of your history can also let you know if anything is outstanding that you may have been forgotten about. This is a great opportunity for you to fix any wrongs, pay off outstanding debts or correct misinformation.

Once you have corrected your credit history, making an appointment with Gateway Funding Inc to get pre-qualified should be your next step. Being pre-qualified is not the same thing as being pre-approved. Having a lender pre-qualify you simply means that he or she will gather your information, go through your liabilities and assets and calculate approximately what you can borrow. This is an informal process and is free. There is no guarantee of a loan, only a base-line of financial information for you to work with. If nothing else, it will outline your chances of actually qualifying as well as provide a guide of how much you may qualify for so you can begin shopping within your new price range.

Getting pre-approved is generally the next step. This is a much more formal process where the lender verifies your employment, ensures your financial status and checks your credit rating. This is the process that will let you know if you qualify for a mortgage or not. The benefit to being pre-approved for a loan is the buying power you have when shopping for a house. Sellers are more likely to take your offer seriously and accept a pre-approved Gateway Funding buyer than someone who has not been pre-approved.

Choosing a lender can be a little tricky these days with so many options. The decision to use a traditional bank, a mortgage broker or to go through your real estate agent are all common choices. This is where it is a good idea to do your homework and research which source will benefit you the most. No matter which route you chose, the first step would be getting your credit back in order.

Some of the major factors that you need to consider before buying a home are creating a budget, researching the property market, investigating fees associated with the loan and property and comparing different types of loans and lenders. Here are some great tips from Gateway Funding Inc for first time buyers:

Before you decide to purchase a home, start saving. The more you have put away, the less you will have to borrow and pay interest on explains a Gateway Funding mortgage broker. Even if you are not considering buying a house right at this minute, you may want one in the future.

: Add up all of the costs of the loan, including fees, the mortgage and bills associated with the home and factor them into your monthly outgoings to get an idea of what you’ll be up for.

: Try not to get too attached to one particular property recommends Gateway Funding Diversified Mortgage Services – this can sometimes make people go over their budget and ultimately in more debt than they can afford.

: Remember, your circumstances can change. While you may not be sick, have children or become retrenched now, they are all future possibilities. To avoid having your home repossessed, consider looking into income protection insurance and also saving a little bit extra each month.

: If you are changing the area where you live, you may need to add in transportation costs like taxi fares, train, or bus tickets.

: In the case that you have any questions or doubts, you should contact your financial adviser, accountant or lawyer.

: If your lender believes that you are not able to afford your loan, they may ask you to have someone sign onto your loan as a guarantor because you do not have enough equity or income. Unless you are absolutely sure, you should not involve family or friends because this can cause lots of strain and stress. If you follow these tips from Gateway Funding for first time home buyers, then you may find yourself in a great situation and a very proud home owner. And always remember, if in doubt, ask for advice and clarification from the appropriate advisors.