Home Buying (Part 5) - Qualifying for a Mortgage

So our contract on the house got accepted. Inspection came out fine. Or if it had isseus, we took it back to the seller and he was able to handle it to our satisacation. So now contract is accepted by both parties. We need to decide on a closing date and get on to finding best mortgage rates. Lets see what are different morgages available.



1. 30 Year Fix - Most common one. Provides for same payment through out the life of the mortgage and minimum monthly payment. Some lenders may provide 20 or 40 year morgage too.

2. 15 Year Fix - Same as above. But since you pay off the loan in 15 years, your monthly payment will be higher, but you end up paying less interest. This type of loan might be helpful during refinancing. For example you had a 30 year loan and then after a while rates went down (usually atleast rate should go down 1 point to cover for closing costs), you have about 20 or so years left on loan, getting it refinanced for 15 year fix may keep your monthly payment almost same, yes you will finish loan soon and also pay less interest.

3. ARM (Adjustable Rate Mortgage) - This is the kind of interest rate, because of which we are in financial mess right now. Yes it does make in certain scenarios. eg. You are not planning to stay in same house for more than 4-5 years.

4. Interest Only - This is the kind of mortgage where you pay only interest during part or full mortgage term. Capital is paid off at the end of the term or at the end of predefined term.

5. Biweekely Mortgage - Could be same at 30 Year fix mortgage, but it is paid Biweekely. Hence reducing the interest greatly.

There are couple of websites that let you put your information and provided you couple of quotes.

I loved http://www.zillow.com/ the most. No personal information is required. You get you contact the lender you think is best.
Another good one is http://www.lendingtree.com/ . But here you do have to provide all personal information before you can get any quotes.