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You’ve found your dream home–Now, the question is, “How am I going to pay for this?” Very rarely do people pay out-of-pocket when purchasing a home, meaning for most home buyers, getting approved for a loan is a crucial part of the home buying experience.
Every homebuyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. Sometimes home buyers even pick a loan based on the knowledge they will be moving again in just a few years. Regardless of how you prefer to finance, it is important to work with a mortgage broker or lender that makes you comfortable and who can find a competitively priced loan arrangement that fits your needs.
At Copperleaf Properties, we want our home buyers to feel comfortable in their home buying experience, which is why we feel it is important to educate shoppers about the different kinds of loans and lending available when it comes to purchasing a home.
Here are four types of mortgages/loans.
A fixed rate allows you to lock in a low interest rate as long as you hold the mortgage and, in general, in s good choice if interest rates are low.. An adjustable-rate mortgage (ARM) usually offers a lower rate that will rise as market rates increase. ARMs usually have a limit as to how much and how frequently the interest rate can be increased. These types of mortgages are a good choice when fixed interest rates are high or if you expect your income to grow significantly in the coming years.
This type of loan refers to any mortgage that doesn’t fully amortize over the loan term. The borrower will make payments over a set period of time (usually 5-7 years), at the end of which the entire remaining loan balance is due at once. This type of loan may be a good choice if you think you will sell your home at a large profit in a few years.
These loans are sponsored by agencies such as Federal Housing Administration or the Department of Veterans Affairs. If you qualify you will be offered special terms such as reduced interest rates. VA loans are only offered to Veterans, reservists, active-duty personnel and surviving supposes. The VA loan is one of the only options available for zero down payment loans. FHA loans are available to anyone. This type of loan does require a down payment. However, it can be as low as 3%. The loan process on a government loan is a much slower process and on an FHA loan you will be required to pay mortgage insurance.
Conventional fixed rate loans are a safe bet because of their consistently. The monthly payments won’t change over the life of your loan. This is your standard, plain-vanilla mortgage. A conventional loan is available in 10,15,20,30, and 40 year terms. 15 and 30 are the most common terms.
© Copyright 2023 by Copperleaf Properties. All rights reserved.
© Copyright 2019 by Copperleaf Properties. All rights reserved.
