Are you feeling overwhelmed with the sheer number of different types of mortgage loa ? Not sure whic
Are you feeling overwhelmed with the sheer number of different types of mortgage loa ? Not sure which one will work best for your situation and needs? Read on for ti to help you compare the advantages and disadvantages to the most common types of mortgage loa .
First, it is important to understand the difference between a variable or adjustable interest rate mortgage and a fixed rate mortgage. With a fixed rate mortgage you gain the advantage of monthly mortgage payments that do not change; however, your interest rate may be slightly higher than what is offered with an ARM. With an adjustable rate mortgage while you will typically have a lower introductory interest rate, that rate may fluctuate over the duration of your loan. This can mean your monthly mortgage payments may become higher or lower, depending on whether interest rates are raised or lowered.
Beyond adjustable rate mortgages and fixed rate mortgages you also have other optio in terms of how long you finance your home. The most common terms are 15, 25, 30, 40 and now even 50 year mortgages in some areas. Keep in mind the longer you finance your mortgage the le your payments will be per month but the more you will pay in interest over the duration of the loan.
There are also ecial types of loa offered which may offer certain advantages. These types of mortgages include FHA and VA home loa . A FHA home loan is often attractive to first time home buyers because it allows the purchase of a home with a lower down payment, in some cases as low as 3%. There are certain qualification regulatio in order to be a roved for a FHA home loa however. You must have good credit history and enough income to cover the loan and your other financial obligatio . Typically, all of your housing costs each month, including house note, property taxes and i urance ca ot exceed 29% of your gro monthly income. In addition, your housing costs plus your other monthly long-term debt should not exceed 41% of your gro monthly income.
VA loa are made available to vetera of the U.S. armed services for the purchase of homes. With this type of loan you can purchase a single family home, condo, new co truction or even a manufactured home. You should be aware that youll usually need to pay a 2% fee when the loan is closed. One of the best advantages to this type of loan is that 100% financing is available. In addition, you dont have to worry about private mortgage i urance, which is required in certain cases when you are financing more than 80% of the homes value. You may also be able to take advantage of a competitive interest rate.
Other optio include balloon mortgages and hybrid mortgages. With a balloon mortgage you may be able to lower your monthly payments by agreeing to pay a portion of the mortgage in a lump sum at the end of the mortgage. The disadvantage to this is that you will have to come up with the money or try to extend the loa which may or may not be available.
With a hybrid loan you can sometimes take advantage of a lower interest rate in the begi ing of your mortgage, perha for three to five years, when you may be struggling more to make the payments. After this time period has pa ed, the interest rate will rise and you will be re o ible for a higher monthly mortgage.
The article is refered from http://www.bbcok.com, http://www.worldloanpro.com, please go to read more.
First, it is important to understand the difference between a variable or adjustable interest rate mortgage and a fixed rate mortgage. With a fixed rate mortgage you gain the advantage of monthly mortgage payments that do not change; however, your interest rate may be slightly higher than what is offered with an ARM. With an adjustable rate mortgage while you will typically have a lower introductory interest rate, that rate may fluctuate over the duration of your loan. This can mean your monthly mortgage payments may become higher or lower, depending on whether interest rates are raised or lowered.
Beyond adjustable rate mortgages and fixed rate mortgages you also have other optio in terms of how long you finance your home. The most common terms are 15, 25, 30, 40 and now even 50 year mortgages in some areas. Keep in mind the longer you finance your mortgage the le your payments will be per month but the more you will pay in interest over the duration of the loan.
There are also ecial types of loa offered which may offer certain advantages. These types of mortgages include FHA and VA home loa . A FHA home loan is often attractive to first time home buyers because it allows the purchase of a home with a lower down payment, in some cases as low as 3%. There are certain qualification regulatio in order to be a roved for a FHA home loa however. You must have good credit history and enough income to cover the loan and your other financial obligatio . Typically, all of your housing costs each month, including house note, property taxes and i urance ca ot exceed 29% of your gro monthly income. In addition, your housing costs plus your other monthly long-term debt should not exceed 41% of your gro monthly income.
VA loa are made available to vetera of the U.S. armed services for the purchase of homes. With this type of loan you can purchase a single family home, condo, new co truction or even a manufactured home. You should be aware that youll usually need to pay a 2% fee when the loan is closed. One of the best advantages to this type of loan is that 100% financing is available. In addition, you dont have to worry about private mortgage i urance, which is required in certain cases when you are financing more than 80% of the homes value. You may also be able to take advantage of a competitive interest rate.
Other optio include balloon mortgages and hybrid mortgages. With a balloon mortgage you may be able to lower your monthly payments by agreeing to pay a portion of the mortgage in a lump sum at the end of the mortgage. The disadvantage to this is that you will have to come up with the money or try to extend the loa which may or may not be available.
With a hybrid loan you can sometimes take advantage of a lower interest rate in the begi ing of your mortgage, perha for three to five years, when you may be struggling more to make the payments. After this time period has pa ed, the interest rate will rise and you will be re o ible for a higher monthly mortgage.
The article is refered from http://www.bbcok.com, http://www.worldloanpro.com, please go to read more.
