• Home Loans 2011 - A Buyer's Guide to Mortgage Loans

    Brandon Cornett

    By Brandon Cornett
    © 2011 All rights reserved

    How do I get a home loan in 2011 How has the mortgage-lending industry changed over the last few years? Am I qualified for a mortgage? What kind of home loans are available today? These are just a few of the questions we will address in this updated guide to home loans in 2011.

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    If you'd like to get started with finding the right home loan, you can use the link provided above. Otherwise, keep reading below for some helpful information about home loans in 2011.

    Getting a Home Loan in 2011 — 5 Things You Need to Know

    What does it take to get a home loan in the so-called new economy? What has changed over the last few years, since the housing crisis and economic recession? Here are five things you need to know about home loans and lenders in 2011.

    1. It's harder to get a mortgage loan today.

    I'll spare you the history lesson about how the economy collapsed in 2008. Let's just say that home loans had a lot to do with the collapse. As a result, lenders today are more strict with their underwriting guidelines.

    Actually, we've simply gone back to the way things used to be, before the "easy credit" days of the housing boom. Home buyers today need to bring more to the table (figuratively and literally) when taking out a mortgage loan. How does this translate to home loans in 2011? Refer to items 2 and 3 below.

    2. Good credit scores are more important than in the past.

    In the past, credit scores did not have the power to kill a mortgage deal. Not on their own, at least. But that has all changed. Today, you can be turned down for a home loan solely on the basis of your credit score. Your FICO score also has more influence over the interest rate you get on your loan.

    What does this mean to you, as a buyer? It means that if you want to get approved for a home loan, you need to have a good credit score. And if you want to secure the lowest rate possible, you need excellent credit. This is not the only criteria for home loan approval in 2011, but it is one of the most important.

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    3. Down payments are a must.

    Have you ever heard of a no-money-down mortgage loan? They used to exist, back in the days of the housing boom. But they're not available anymore. In 2011, you'd be hard pressed to find a lender willing to finance 100% of a home purchase. The VA home loan is the only option for 100% financing.

    Most home loans today will require a down payment of at least five percent. You can put a little less down on an FHA loan, if your credit score is strong enough. But you'll still have to bring something to the closing table.

    If you're planning to apply for a home loan in 2011, you need to start saving money. The more, the better. You'll need sufficient funds to cover your down payment, your closing costs, and maybe even a little extra for cash reserves. This is one of the first things a lender will look at when you apply for a loan: "How much does this person have in the bank? Can they afford the down payment on the home loan, and do they have enough to cover their first payment(s)?"

    4. ARM loans only work in certain situations.

    Adjustable-rate mortgages (ARMs) were a popular financing tool during the housing boom. They're also one of the primary causes for the housing bust. These home loans can be enticing on the front end, because they usually start with a lower rate than a 30-year fixed mortgage. The trouble comes when the home loan reaches the first adjustment period. If you don't sell or refinance the home before that first adjustment, you could see your monthly payments swell in size.

    This is why it's so important to research the different types of home loans, before settling on one. By understanding the pros and cons of each financing strategy, you'll be able to choose the loan that best meets your needs.

    Often, the question of choosing a fixed vs. adjustable mortgage comes down to your long-term plans. Will you be staying in the home for many years? If so, you're better off with a fixed-rate home loan. If you'll only be in the house for a few years (and you're fairly certain of that), then you might benefit from an ARM loan.

    5. Home loan rates will probably remain low throughout 2011.

    If you refer to our collection of 2011 housing market predictions, you'll notice that many people feel home loan rates will stay below five percent for much of the year. This means that the cost of borrowing is the lowest it's been for many years. It might be tougher to qualify for a home loan in 2011, but the rewards are worth the effort. Getting a lower interest rate could save you many thousands of dollars over the life of the loan. So if you're still on the fence about buying a home, you need to consider this important factor.

    This website contains a wealth of information about home loans, house hunting, and other topics of interest for first-time buyers. If you would like to learn more about this topic, try using the search box located at the top of this page. If you're ready to move forward and apply for a home loan, you can do so from this page.