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Mortgage Combinations Help Bad Credit Buyers
By Joe Taylor Jr.
CMR Columnist
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The housing market has finally come down from its five-year boom, and home buyers and sellers are proceeding with somewhat more caution. If you are considering buying a home in California, talk to a financial advisor before using a creative mortgage to finance an expensive home.
Bad credit or an unsteady employment history can make potential homebuyers feel like they have few options. Fortunately, today's slowing mortgage market means that brokers and lenders are ready to cut deals that they would have avoided only a year ago.
First, carefully analyze your current budget. If you try to buy more house than you can afford on your present income, you might find yourself limited to an interest only mortgage. Despite the benefits of a low down payment, your payments will fluctuate with home mortgage loan rates. In addition, your payments jump dramatically, usually in the fifth or seventh year of your mortgage, when you must start paying down your principal.
New Combos Unhook Buyers From Fluctuating Home Mortgage Loan Rates
Alternatively, some mortgage lenders now offer a clever combination of a traditional mortgage with a simultaneous home equity loan. Unlike an interest only mortgage, which puts you at the mercy of home mortgage loan rates, this combination lets you enjoy a fixed rate on your primary mortgage. This way, you can leverage the full value of your new home with a down payment of less than five percent.
Not every lender will be willing to offer a combination mortgage and home equity loan, so you may have to do some shopping. Compared to an interest only loan, this deal will save you more money in the long run while still letting you move in to your new home sooner than you could if you had to raise a full down payment.
About the Author
Joe Taylor Jr. coaches musicians, entrepreneurs, and other adults that want to shift their careers. He holds a Bachelor of Science in Communications from Ithaca College.
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