At the heart of the American Dream lies home ownership. From the young first time home buyer, to the senior citizen who has owned many homes, to everyone in between, the benefits and sheer joy of being a homeowner are tangible and can be seen and felt throughout every generation.
Home ownership has been identified with success in the United States, and for good reason. It has been well documented that those that own their own home tend to have higher incomes, are more stable, and have the ability to retire earlier than their counterparts that are tenants or renters. The pride enjoyed as a homeowner has transformed many people as well as neighborhoods and communities. The communities where most of the occupants own their home have been shown to have better schools, lower crime rates, more opportunity, and higher paying jobs. As much of life is about setting goals and attaining them, many people are able to leverage the good they feel in owning a home for the first time into the acquisition of other goals. The goal of home ownership is part of our lives from a young age, attaining that goal provides a sense of freedom, a sense that anything is possible.
Though not always the case, most people today acquire financing for their homes. Most homeowners, known as “borrowers” by banks look for a bank that can help them fulfill their goals of homeownership by lending them money that is secured by the home. The prospective homeowner seeks a mortgage on the home, or a loan. The home is used as collateral, with the bank being reassured that they can cover their investment with the proceeds of the sale of the home if the borrower cannot repay the debt that is owed. For that, the bank charges interest, or a fee on the money borrowed. That fee, or interest is established when the homeowner first buys the home and is detailed in the contract, or loan documents as the interest rate. This can be a fixed interest rate or it can adjust, but it is all established with the contract. Normally, the bank will not finance more than a home is worth, with the worth being established by an expert called an appraiser who understands the local market and the type of house that is being purchased. Most banks will also require a down payment on the home in order to lend money to the borrower so both the bank and the homeowner are invested in the home. Once the debt has been paid, the homeowner owns the home, and the bank is no longer invested in, or has any claim to the home, the bank effectively exits.
Banks are the relationships that people use to attain loans today, but nearly 97% of all loans undertaken by banks today are backed by the Federal Government. GovHomeLoans.org is the largest and best resource for the loan programs that are most utilized by borrowers and banks today, and we want to help not only educate you to your options, but help you in every step of the way toward home ownership.