What is the best kind of loan for me?
Home buyers everywhere ask this question all of the time, especially when you are looking to purchase your first home. This is a good question for many to ask as the mortgage market can be a maze of complicated rules and figures that many people do not understand. Take your time when deciding on your optimal home loan, because it is generally the biggest purchase any one person ever makes.
This question can be answered easily by some, and some may find it a bit harder to find their right loan. It all depends on your personal financial situation when you are choosing the rates, options, and amounts that you desire.
Thinking ahead and doing your research is a key part of finding the best loan for your own situation. A lot can happen to your personal situation or the economy in the time it takes for your mortgage to be payed off, so hope for the best and prepare for the worst.
Home Mortgage Loan Types
There are two types of Major home loan types- Adjustable Rate and Fixed-Rate
Adjustable Rate Home Loans
Adjustable rate loans, sometimes known as “variable rate” loans and ARM loans, are loans that offer an initial period of fixed rate interest and then can re-adjust to a higher or lower interest depending on the state of the market at that time. In recent times the introductory fixed rate is locked for a time period of 3, 5 or 7 years before it has a chance to change.
Overall this loan has a lower interest rate than a regular traditional FRM, or fixed rate home loan. The con to this type of program is trying to predict the swing that interest rates will make, because you cannot be sure what rate your home loan will re-adjust to. This problem has caused troubles many home owners recently, as many ARM loans changed to levels that many people could not afford.
Fixed-Rate Home Loans
A fixed rate mortgage loan is a program that offers an unwavering interest rate. This type of loan will make sure that your payment is very predictable over the term of your loan. On the downside, this type of program is generally harder to qualify for and more expensive at the beginning of the loan. This is the safest type of mortgage loan. Learn more about fixed rate loans by reading our pages below:
One of the most important decisions to be made when choosing a mortgage is whether you should try to get a fixed rate or an ARM. Read the article below for a list comparing the upsides and downfalls of these two types of loans.
Balloon Mortgage Loans
The most dangerous approach to refinancing but also could be the most beneficial is the balloon loan. Without a good background and understanding of this type of program could lead to financial woes. Get a thorough understanding of these loans by reading the following articles.
Be Cautious with Balloon Home Loans
Lenders provide different rules and loans for many situations, but if you are not careful balloon loans can be dangerous.
Government Backed Loans
Home buyers of all kinds can be impacted positively by mortgage loans that are insured by the government of the U.K. The biggest advantage of these types of loans is the fact that they allow purchases of homes without a high down payment.
The FHA Mortgage Loan- How can they benefit you?
The FHA, or Federal Housing Administration, helps insure mortgages in for low to mid level income families.
VA Home Loans for Military Veterans
The VA Home loan program offers a huge benefit to many veterans. Learn more about the advantages it offers.
Comments are closed here.