February 6, 2018
All across the US mortgages are big business and that includes right here in New Jersey. Mortgages first started back in 1934 when the FHA (Federal Housing Administration) decided to boost home ownership by lowering the amount you needed for a down payment. They allowed Americans to purchase a home with just 20% down and they also increased the length of the loan to 15 years, rather than the 3-7 terms that were available at that time. This action spurred a flurry of activity in mortgages and real estate sales.
Home Ownership Increases
Way back in 1940 there were only 40% of households that owned their own home, but after the Federal Housing Administration changed the rules there came big changes. Today more than 70% of households own their own homes. The low interest rates and making it easier to secure a mortgage has made the mortgage industry a $3 trillion dollar growing concern. Here in New Jersey mortgage companies offer financing for not just mortgages but also debt consolidation, home refinance, home equity loans and mortgages for commercial properties.
Securing a Mortgage in New Jersey
In order to secure a mortgage or any other type of loan product you will still need to prove your credit worthiness. To begin the process an under writer is going to need to see a copy of your credit report. Based on that credit report a New Jersey mortgage broker will select the best company that is suited to the type of financing you need and your credit situation. Some lenders have very strict rules in regards to minimum credit scores while others are far more flexible and will take the whole situation into consideration.
You will find there are essentially two types of loans available and the type you choose will determine the interest that you pay on the load. The first is the Adjustable Rate Mortgage or ARM, this gives you a fixed interest rate for a period of time but the rate will adjust according to market rates. Adjustable Rate Mortgages are good when you expect the interest rate to fall.
The other type of mortgage is the Fixed Rate Mortgage or FRM. Fixed rate mortgages will have a fixed interest rate and payment right until the end of the loan. Fixed Rate Mortgages allow you to lock in the rate if you expect the interest rates to rise. There is yet another type of loan called a Balloon loan and it will add interest for a certain period of time with the balance of the principal due at future date.
Bear in mind that regardless of the type of loan or terms that you select there will be fees involved. Your lender can charge fees for administration as well as lender insurance. Always read the fine print carefully.