Know Your Mortgage Options

The decision to purchase a new home can be very exciting but grueling at the same time. You may even be wondering if there's a mortgage out there that would meet your needs. Well, rest assured that no matter what your dreams, goals, even credit history, there's more than likely a home loan available that's right for you.

Indeed, good solutions exist whether you want to purchase a new home, refinance your existing home, or take out a second mortgage.

Lenders are generally looking for two main factors when they review your mortgage application: your ability to repay the loan and your willingness to repay the loan.

Many lending companies are flexible enough to address borrowers' needs on an individual basis. They understand that occasionally circumstances occur that could have a negative effect on your credit rating. These unavoidable situations, such as an unexpected illness or temporary job loss, can cause people to become delinquent on monthly payments. These lenders will try to help you in many cases even if your credit history is less than perfect.

In general, your ability to repay is based on:

Your employment income-how much you make at your current job, and Your employment history-generally mortgage companies prefer that you have been employed at the same place for at least two years. And your willingness to repay is based on:

How will the property be used?-will you be occupying the house or will you be renting it out for additional income? Your credit history-how current are you on all of your monthly payments and do you have any other outstanding debt? When you apply for a loan for a new home, remember that you do not have to have the house picked out to begin the process. You may be able to pre-qualify (to determine your eligibility), and go straight to the application process while you're still scouting the neighborhood.

When thinking about your mortgage, remember that there are different terms available: fixed rate (interest remains constant over the life of the loan), variable rate (interest fluctuates); the common 30-year loan vs. loans of different lengths. There is also the LTV: loan-to-value ratio, which describes the amount of the loan compared to the value of the property. Different lenders offer a spectrum of loan programs that incorporate different configurations of these features.