- 03 Mar 2021
- 4 minutes
Many people desire to be a homeowner but the Mortgages rates are more than what some persons can handle, so they opt for leasing or renting an apartment if they cannot afford to finance homeownership by themselves. There is no doubt that a lessee or tenant is bound by the rules and obligations of the lease or rent agreement and they would always crave freedom.
Overview of Mortgage in the US in 2021
The year 2021 provides US residents seeking to own a home a very good opportunity to achieve their desire. Of course, that’s a bit surprising as the world is in a phase because of the outbreak of the Coronavirus pandemic.
According to mortgage advice, 2021 is a good year yet to take out a mortgage even with the ongoing pandemic in the US. This is because the mortgage interest rates are near a record low and there are projections that mortgages rates will likely keep going low as the year progresses.
What this means is that due to the low-interest rates, homebuyers can afford more expensive homes. Yes, you can now afford to take out a mortgage on that dream house of yours without going neck-deep in debt.
So, do you want to become a homeowner? You should know more about how loans work in the US and have an idea of how to use reviews from visitors to estimate your monthly mortgage payments.
However, before we go any further, let us take a look at what mortgage and its rates mean to ensure that we are not losing the newbies.
What is a Mortgage Loan?
A mortgage loan is a loan taken out to buy a property or land which is secured against the value of the property or land purchased. What this means is that the collateral for the loan awarded is the property or land which was purchased. The borrower of the loan is to repay the loan according to the agreement with the lender.
However, if the borrower defaults and doesn’t meet up with his agreement with the lender, it is within the lender’s right to sell off the property or land purchased to recover his money.
Understanding Mortgage Interest Rates
Mortgage interest rates are charged on the mortgage loan. These interest rates are mainly decided by the lender and can either be fixed or can vary. You are advised to check out rebuilding society reviews to find out what experts are saying about mortgage rates.
Is There a Need to Compare Mortgage Rates?
There are various types of mortgage rates that home buyers can explore. You are encouraged to compare mortgage rates to make an informed decision by choosing the best plan for you. Some of the mortgage rates offered are:
Fixed rate mortgage
Fixed rate mortgage refers to a type of loan where the amount of the loan repayment remains the same throughout the fixed time of the loan repayment. The interest rate of the loan is set up in a way to accommodate this repayment process. Fixed rate mortgage is the preference of most borrowers because this method of repayment makes it easy for them to plan their mortgage payments.
Variable rates mortgages
For variable rates mortgages, the interest can change occasionally. This means that the amount you pay at the start of the loan repayment may not be the same amount you’d pay going forward with the loan.
Standard variable rate mortgage
This standard variable rate is most times higher than the rates obtainable by other types of mortgage. It allows the lenders to move the interest rates as they like and as a borrower, you have no control over the changes implemented.
The 2021 Home Buying Process
The claws of the pandemic couldn’t reach the home buying process. So, contrary to your thoughts, Mortgagees pay more attention to conducting the necessary due diligence and analysis before granting the Mortgage loan.
Eligibility for a Mortgage Loan
It is pertinent to note that the decision to take out mortgages isn’t dependent on the rate primarily but on your financial capacity.
Listed below are some of the criteria that mortgagees consider in deciding whether to grant a mortgage loan to a prospective mortgagor
Steady income with dependable employment or business
Have a high credit score
Have some money for a down payment
How much is needed for a down payment?
Making down payments for your new home is essential for a home mortgage. Usually, homeowners are expected to pay between 3% and 3.5%.
This means that if your dream home is about $200,000.00, you will need to have saved up between $6,000.00 to $7,000.00 as a down payment.
Can I buy a house without a down payment?
Taking out a mortgage on most expensive homes would require that you pay the stipulated down payment.
However, there might be a few exceptions to this if the house is located in rural areas. Also, you would need to meet up to certain income limits to be able to qualify for a 0% down payment.
If you are interested in getting yourself your dream house in the US, 2021 is that year for you because the Mortgages rates are extremely low this period which makes mortgage payments less difficult