Upside Down Mortgage

Subprime Rate Mortgage

Question: How does Bush's subprime plan impact the housing market?

http://money.cnn.com/2007/12/06/real_estate/Bush_plan_is_limited/index.htm?postversion=2007120616

Be patient, I don't know jack about real estate, but my fiance and I are getting tired of renting and have been talking about buying our first home soon. Our first step will be to meet with a mortgage broker to figure out a loan and mortgage we can afford, then with a realtor to figure out what we can get for that.

I know that housing prices have been falling all over the country, but I just read this headline and I don't know anything about what a "subprime" is or an "adjustable rate mortgage" vs "fixed rate mortgage" and I'm about to pass out because my head hurts.

What's the advantage/disadvantage of an adjustable vs fixed mortgage? Isn't that just the interest rate on the loan?

Lots of questions, I know, but I've made my share of mistakes in the past. I'd like my first home to left off that list.

Thanks, and any other tips would be helpful!

Answer: Subprime loans are those designed for borrowers who, for credit or lack of documentation reasons, cannot qualify for generic financing. Rates and costs for these loans are higher because they are a higher risk product.

An adjustable rate loan (ARM) is a loan that has a beginning rae that is lower than the current fixed rates but adjusts on a scheduled basis according to th eidex that governs the loan. These can be excellent products for specific circumstances but are not for the unsophisticated borrower as the rate adjustments can negatively impact the monthly payment if interest rates increase.

A fixed rate loan is exactly that, a fixed interest rate for the term of the loan. It is the more conservative position and is, historically, the most popular choice.

The mortgage crisis has involved some borrowers who elected ARM loan because some of them qualify at the lower start rate allowing the buyers to qualify for a higher loan amount. When the rate adjusted they were no longer able to afford the payment.

Shop for your loan officer carefully. Look for someone who spends more time investigting your needs and goals than they do selling themselves or "the lowest rate". rate is only one component of what makes a loan the right one for you. Have them explain all of your options so that you may chose the right loanproduct. Don't let them choose for you.

San Antonio Fixed Rate Mortgage no subprime

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