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  Chapter 12
  Mortgages and Car Loans
  Home Mortgage Loans
  Qualifying Ratios
  Working With a Loan Broker
  Home Loan Mechanics
  Amortization
  Paying Points
  Amount of the Loan
  The Down Payment
  Closing Costs
  Lo-Doc and No-Doc Loans
  Length of the Loan
  Refinancing
  Auto Loans
  Shopping for Car Loans
  Conclusion
  Previous Chapter
  Next Chapter
  Contents

 

Home Mortgage Loans

A home loan typically is the largest debt a consumer has. Choosing a mortgage is a big decision, and one that must consider many variables.

One of the biggest mistakes home buyers, particularly first-time home buyers, make is underestimating the expenses related to owning a home—including maintenance costs, repair costs, property taxes and homeowners insurance. That can lead to credit problems, after you’ve gotten a mortgage.

The taxes and insurance on a home can be especially expensive. And the cost is magnified is you borrow heavily to buy the house.

Still, owning a home is a good goal—both personally and financially. People rarely lose money owning a home…and usually make money doing so. Home ownership also tends to improve people’s financial circumstances and attitudes, generally.

Once you’ve analyzed all of the costs associated with your new home, as well as your other monthly expenses, you should have an idea how much you can afford to pay each month for your mortgage. At this point, you’re ready to talk to potential lenders—before you start shopping for a home.

Next: Qualifying Ratios

 

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