Secrets Of Mortgages Explained

In the United States there are three types of mortgages: Residential

, multi-family residential, commercial, and farm. The same applies to the companies that deal with mortgages. There are also three categories: Mortgage bankers, mortgage brokers and mortgage services.

Mortgage bankers, or lenders, make loans to people or companies who want to invest in property. Mortgage brokers act to bring the borrowers and lenders together, and mortgage servers collect mortgage payments.

Mortgage bankers usually look for borrowers who have a credit score of 640 or above a housing ratio of above 30% and a debt ratio of 40% or more. Housing ratios are what consumers pays on a monthly basis for principle, interest, taxes and insurance, And is divided into the borrowers monthly income. The debt ratio is what the borrower pays on all debt.

There are several types of home mortgage loans. Fixed rate mortgages allow the interest rate and interest payments to remain the same for the period of the loan. Adjustable Rate Mortgages mean they can vary though out the term of the loan. Hybrid loans remain fixed for a period of time and then slowly increase. Reverse annuity mortgages pay an annuity while equity decreases. Balloon mortgages calculate the payment over a 30-year term but the balance can, and usually does, come much earlier.

The government also offers mortgage loans to qualified applicants. Three agencies that do this are the Federal Housing Administration, the Department of Veterans Affairs, and the Farmers Home Administration. The FHA helps low income people secure loans for housing, the Department of Veterans Affairs is limited to assisting only honorably discharged veterans, and the Farmers Home Administration specializes in assisting farmers qualify for farm loans.

Before considering which mortgage will be best for you and you family, talk to a financial advisor about creating a plan that gives you the best opportunity to obtain the best interest rate with a monthly payment that allows you to pay off both interest and principle each month.

by: Chris Cornell

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