subject: How To Identify What Mortgage Loan Is Most fitting For You? [print this page] How To Identify What Mortgage Loan Is Most fitting For You?
When you are ready to buy a home, there are quite a few different loan programs possible that help to provide financial assistance. Home ownership is one of the backbones of our economy, so regardless of the economic climate, you will still be able to find a mortgage solution that can help you obtain the home you desire. If you are already a homeowner, but you would like to refinance in order to get more money on hand, there are loans that make this applicable as well.
Let's take a look at multiple mortgages and see what may be best for you.
Fixed Mortgage Rate Loan - This is a basic loan that keeps the interest rate secured in at a certain point. This rate remains the same over the entire extent of the loan. This is optimal for most homeowners because you will always know what your mortgage payment is going to be. Most loans in this classification are for 30-years, but you can also find 15-year and 40-year loans at fixed rates.
FHA Loan - This is a loan that is supported by the Federal Housing Authority (FHA) and offered to people looking to acquire their first home. FHA loans are especially designed for likely buyers with diminish credit scores, or who have not established much credit yet. If you meet the requirements for this loan, you'll only have to make a 3% down payment on the home. You'll need to find a lender that specializes in this type of loan. In addition, there's a cap on the amount of dough you can get.
VA Loan - A VA loan is for people who either are currently serving in the military, or have earlier served in the military. Spouses of military members can also apply for this loan. The VA loan program was designed to make it easier for those who have served our country to buy their own home. Some of the qualities that makes this loan a good deal are: no down payment, no private mortgage insurance, up to 100% funding on new homes or refinancing and more lenient credit and income requirements.
Adjustable Rate Mortgage (ARM) Loan - An ARM loan can have really attractive rates that are often lower than a regular loan. However, this type of loan is best for those who plan to perch in the house for only a short period of time. If you without question know you're only going to own a home for 5 years or less, then an ARM loan's short-term fixed rate could be a great deal. Because the interest rate on these loans will begin to change after the set rate period expires, this loan is not proper for long-term homeowners.
Interest Only Loans - Wouldn't it be nice to simply pay only the interest on a mortgage loan for several years? Well, this is correctly what happens when one gets this type of loan. The bank will set the terms of the payment agreement - say, 5 years. During the five years, the borrower only pays the interest, which leaves a large chunk of money in their pocket for other things. At the end of the 5 years, the homeowner then must begin paying on both the principle and interest of the loan. Without proper financial calculation, this type of loan can lead to suffering. It's best suited for those who intend to own the home for a short period, or who have lots of resources on hand in the bank.
Reverse Mortgage Loan - If you are age 62 or over, you have the opportunity of securing a reverse mortgage loan. This loan is based on your home's ranked value. The higher the value, the more money you will come into. The loan is designed to provide senior citizens with monthly payments that they can use to cover living expenses. Your home must be paid off fully before the cash benefits kick in. Be cautious of hidden fees that some immoral lenders charge. These fees can greatly diminish the amount of money you get.
