After the great subprime mortgage crash and subsequent recession of 08-09, banks and lenders have introduced stricter provisions for mortgage & finance qualifications. Even so, the doors are still wide open for someone who knows how to put up a strong financial statement. Truth is, banks have fully recovered from the recession, and they badly need home buyers.

What’s different now is that a lender will need a sizeable down payment, regardless of other factors. Another noticeable change is that home buyers are playing it safe and heading for fixed rate mortgages. That is understandable given the chaos surround bad ARM loans over the last two years.

This doesn’t, however, change the fact that a good Adjustable Rate Mortgage can save a lot of money in the long run. With fixed-rate mortgages, all that really needs to be worked out is the repayment period, as in the size and number of mortgage payments. For an ARM, get hold of a mortgage rate calculator on the internet, and start comparing offers. The most important thing to understand here is the difference between the interest rate and the APR, or annual percentage rate.

Either way, understand the difference between the quoted interest rate and the annual percentage rate (APR). Failing to understand this difference is what led to the flood of foreclosures and defaults in the past two years. Credit ratings are also very important these days, and it is difficult to get a loan without solid credit. There is no magic wand to fix broken credit or get a home loan without a sizeable down payment.

It takes time, hard work and sacrifice in order to save money and build up sufficient credit for buying a home. To be noted that inspite of doing all this, many people have lost their homes and have been left saddled with debt in the aftermath of the subprime crash. Property values have dropped so much that in many cases the loan balance outstrips the sale value.

Borrowers lost the home, the payments that had already been made to the lender, and on top of that ended up owing the difference to the lender. To make sure this doesn’t happen again, it is of utmost importance to do a lot of research first. Find the right loan and the right lender before selecting a property.

Get pre-approval for the loan, and only then set out on a hunt for a suitable home that matches the loan limits. This leaves enough room for mortgage & finance variations, and possible refinancing. It’s also a good idea to maintain a contingency fund for making mortgage payments, to offset income loss or unexpected expenses.

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