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Different Types of Mortgage Loans and Importance of Credit Score

Different Types of Mortgage Loans and Importance of Credit Score

California - Due to the state of California's ever changing home market, receiving a mortgage loan can prove to be a difficult process. With borrowers ignorant of state specifications and basic terms and practices used, this is especially true. Most times there is the requirement of a down payment, which can be calculated as twenty percent of the total loan. Such a high number is hard for borrowers to arrange, even for those who have decent credit scores.

This is because the prices of homes have skyrocketed. However, with the consistent increase of the price of homes in the state of California, lenders now permit prospective borrowers no money down loans. Home buyers have several options when it comes to loan terms, which includes fifteen, twenty, thirty, or forty year periods. Low interest rates are ensured when a reasonable combination of loan type and loan term are matched with down payment, thus enabling borrowers to lock in their rates at this significantly lowered down value. A wise option is a fixed rate, which will allow saving interests on long term loans.

When rates rise, this amounts to abundant savings. There are many factors that determine mortgage interest rates, which include credit score of the borrowers, amount of the down payment, amount of the loan that was applied for, and the policies of the lender. Considered prime borrowers, people who have high credit scores are often offered a California home loan that includes low interest rates. Not only may applicants with outstanding credit scores qualify for zero down payment home loans, they may also qualify for loans which do not require documentation nor stated income.

It is possible for anyone to apply for a mortgage considering the amount of loan options available in the state of California. Loans are even attainable for those with less than desirable credit scores, made possible by lenders who specialize in bad credit mortgages.