Home loans and autoloans in USA

From Immigration Wiki

Jump to: navigation, search
US Home | Wiki Help | IV Home | All Countries |

Home Loans


After you made the big decision of buying a house in the USA, the next big step is to get a home loan. Mortgage which is described as "a lien on a property/house that secures a loan and is paid in installments over a set period of time."

There are many types of Mortgages, each with its own advantages and disadvantages. Selecting the right type of mortgage keeping your personal situation in mind is important.

Buying a home and securing a mortgage comes with great responsibilities. Some of the responsibilities include:

  • Are you currently in a financial position to comfortably make the monthly mortgage payment?
  • Do you have a financial cushion in case you have sudden financial difficulties (for example losing your job)?
  • Are you prepared to take on a long-term financial debt?
  • Do you know the risks if you cannot pay your mortgage in the future?

There are various types of Mortgages that you can think of securing. Some of them include:

  • Fixed Rate Mortgage
  • Adjustable Rate Mortgage (ARMs)
  • Balloon/reset Mortgages
  • Reverse Mortgage

Fixed Rate Mortgage

Fixed-rate mortgages are the most common mortgage for first-time homebuyers because they're stable. Typically the monthly mortgage payment remains the same for the entire term of the loan – whether it's a 15-year, 20-year, or 30-year mortgage – allowing for predictability in your monthly housing costs.

Adjustable Rate Mortgage (ARMs)

Because the initial interest rate is usually lower than a fixed-rate mortgage, you may qualify for a larger loan amount. If interest rates are high when you get your mortgage but drop during any adjustment period, your monthly payment may decrease. But a decrease is very unlikely, so don't base your choice of mortgage on this. An ARM with a low initial interest rate and an initial adjustment period after 5 or 7 years can save you money. ARMs can, and often do, have interest rate increases at adjustment periods. You may have an increase in your monthly mortgage expense after adjustment periods.

Balloon/reset Mortgages

Balloon/reset mortgages have monthly mortgage payments based on a 30-year amortization schedule, but the entire mortgage balance is due at the end of the 5- or 7-year term, unless you choose to reset your mortgage at the current rates. So you have the advantage of a low monthly payment, like someone with a 30-year loan, but you must pay off the loan at the end of the specified term or exercise your reset option at the end of the term. Many borrowers think of balloon/reset mortgages as "two-step" mortgages.

Reverse Mortgage

Reverse mortgages are a new type of mortgage designed specifically to be appealing to older homeowners. In regular mortgages, the homeowner pays the lender. In reverse mortgages the opposite is true – homeowners receive money that does not need to be repaid until the home is sold, the homeowner dies, or does not use the home as the primary residence.

If you dream of giving your home to your children after you die, a reverse mortgage may make that difficult since the equity in the home will have been depleted.

Once you identify the type of Mortgage you would want to get, approach various financial institutions/Banks and shop around for rates.

Auto Loans

Once you identify your dream car and negotiated with the dealer on the price, the next step is to get an auto loan. The greatest temptation with a generous dose of encouragement from the sales person, it to get a loan at the dealership. Do you know the sales person gets a commission for making you take the loan at the dealership and may not be the best deal for you? One possibility is to lease a vehicle which is not covered on this page.

There are multiples sources for your auto loan, explore all the avenues.

  • Dealership
  • Bank or Credit Union
  • Friend or Family member
  • Home Equity Loan
Shop around and get the best possible rate. The rate which you see in the advertisements and the final rate which you can secure depends on your Credit Score. Also, new car loans have a lesser rate than used cars. There might be special offers which you have to keep in mind like cash back or 0% APR offers.

Copyright © 2005 - 2009 ImmigrationVoice.org.