Tuesday, May 28, 2013, AM | Leave Comment
The rates of mortgages are increasing since last two weeks but it’s not a big worry for those who still have not applied for mortgages. The mortgage rates are historically low even after such a nominal increase. The interest rate for a 30-year fixed mortgage loan increased from 3.42% to 3.51% in second week of May 2013 whereas the interest on the 15-year fixed mortgage increased to 2.69% from 2.61%.
Need not to say these mortgage loans are fixed interest rated and therefore the interest rate remains same throughout the loan period to save consumers from increasing index rates.
Despite such increase in mortgage rates, there is no reduction in number of people looking for mortgage. The first and for most reason for one to get attracted towards mortgage loan is that it secures a house for consumers.
The house can be new or old after all a life time memory for consumer. He has to live and die in his dream house and who would not like to protect it even through a loan for him and his entire family.
Any common man will agree with the fact that those who have houses are well protected than those who don’t have it. Remember Sandy incident?
Mortgages come with great flexibility as well. Those who have a lower repayment capacity generally go for a longer period of mortgage loan say 30-year period. Not just that, USA has many options to offer to borrowers with lower repayment capacity.
Certain mortgages are interest-only mortgages meaning by the consumers need to pay only the interest of the mortgage for a certain initial period and the principal amount starts later. This way borrower gets some relaxation time to gather funds and pay off the mortgage in full.
If the person has a secured job then he can easily own a mortgage loan and repay it in time. Not just the loan, he can also receive insurance on the house which can be paid in single monthly installment. This way he can protect the house from any man-made damage or natural destruction. The interest costs add up around 1% to interest costs.
Not only borrowers have advantages from mortgages. The lenders provide these secured loans to have conditional rights on property which can be sold to recover the defaulted dues if any.
The lenders are also protected from shaky customers through FHA insurance. On the other side certain federal regulations provides VA loans to consumers who have bad credit problems and cannot be selected under other schemes. These loans works for them like bad credit loans.
House doesn’t have just emotional values. It can be really strong properties whose fair market value is if high then borrowers can have re-borrowing capacities generated freely. It is called home equity in technical matters.
Borrowers can borrow further amount in cash by releasing the equity of the house and due to the unique nature of houses, the equity gets rebuilt automatically giving borrowers plenty of chances to borrow further money.
Only fools will not buy home on mortgage.
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