What Are The Different Mortgage Loan Options

What Are The Different Mortgage Loan Options



What Are the​ Different Mortgage Loan Options?
When it​ comes to​ financing your home,​ you​ have a​ few options to​ take into consideration .​
It can be confusing and you​ may not know the​ difference between the​ options or​ know which one is​ right for you​ .​
Let’s take a​ look at​ the​ three most popular mortgage loan options.
Fixed mortgage loans
Fixed mortgage rate loans are the​ most popular type of​ home loan .​
With this type of​ loan you​ will know upfront what your monthly payment will be for the​ life of​ your loan.
The 30 year fixed rate loan is​ probably the​ most common loan selected by home buyers because the​ loan is​ spread over a​ longer span of​ time which reduces the​ monthly payment required each month .​
However,​ it​ increases the​ amount you​ have to​ pay over time due to​ interest as​ opposed to​ a​ shorter term loan.
The 15 year fixed rate loan allows you​ to​ pay off your home if​ fifteen years and is​ a​ popular choice for home buyers that can afford a​ higher monthly payment .​
You will only pay half the​ interest you​ would otherwise pay with a​ 30 year loan.
Biweekly loans are usually tied in​ with a​ 30 year fixed rate loan .​
Payments are made every two weeks instead of​ monthly .​
This lowers the​ amount of​ interest you​ have to​ pay and means your home will be paid off a​ few years sooner.
Adjustable rate loans
The adjustable rate mortgage can be tricky for those that don’t understand how it​ works or​ are on​ a​ tight budget .​
The amount you​ pay each month depends on​ the​ current interest rate .​
Therefore it​ is​ possible your payments will increase as​ time goes on.
Convertible loans
This type of​ loan allows you​ to​ switch from a​ fixed rate loan to​ an​ adjustable loan or​ vice versa .​
This gives you​ flexibility in​ the​ years ahead to​ switch your loan type to​ get the​ lowest interest rates and lowest house payments.
Interest only loan
If you​ work on​ commission or​ receive a​ big bonus each year as​ part of​ your salary,​ you​ may be interested in​ an​ interest only loan .​
With this type of​ loan,​ you​ just make the​ interest payments each month until you​ get your bonus,​ and then you​ make a​ lump sum payment on​ your mortgage.
Balloon loan
A balloon loan is​ a​ fixed rate loan that has small monthly payments which span around seven years .​
Then at​ the​ end of​ seven years you​ must pay off the​ loan in​ a​ lump sum payment or​ refinance the​ loan.
Reverse mortgage
A reverse mortgage is​ for those with a​ lot of​ equity built up in​ their home .​
The loan requires no mouthy payment,​ however the​ loan needs to​ be paid off if​ you​ sell your house.
FHA mortgage
This type of​ mortgage loan is​ a​ good match for first time home buyers and those with little money for a​ down payment .​
FHA loans require a​ smaller down payment than conventional loans and the​ monthly payments are also less.
Veterans loan
Veterans loans are only for those who have served in​ the​ armed forces and their survivors .​
No down payment is​ required for this type of​ loan.
You can see there are quite a​ few choices to​ mull over .​
The best idea is​ to​ consult with your realtor,​ financial advisor,​ or​ other professional to​ help guide you​ through the​ types of​ loans available and how to​ choose the​ one best for you.




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