Posted by Terry Butcher on Rating 9.0 ?Outstanding
Owning a home is a very popular goal for many Americans. It is a goal that plenty of Americans try to accomplish everyday. You probably want to buy a house also. However, just like others, you do not have the cash to buy a new home. The average person has to get a home loan in order to purchase a home. There are many different home loans available to choose from. This article will go over some of the home mortgages that you can choose and their various attributes.
Fixed Rate Mortgage
The most well known kind of loan comes with a fixed rate loan. The reason that so many people like this type of loan is because it is so stable. The monthly amount will not adjust unless you authorize adjustments to the loan. A fixed rate mortgage has a rate of interest that is locked in over the course of the loan. The origination rate is the same interest rate that the loan will honor over the life of the loan.
The most preferred loan duration is 30 years. But, there are those who want a loan for 15 years too. So you have the chance to apply for either a 15 or 30 year loan with a mortgage that has a fixed rate. This is why a lot of people like fixed rate mortgages. You can easily budget your money for years to come. The monthly payment is always known. You don?t have to stress out about the interest rate changing.
Federal Housing Administration Loans
FHA loans were created for people who are first time buyers or people who do not have much money to put on a new home purchase. Not only are first time home buyers usually approved for these loans, but they only have to come up with a three percent down payment. This is due to the fact these loans are backed by the FHA. All in all, a government backed loan is easier to get than other types of fixed mortgages.
VA Loan
A VA mortgage is a different kind of fixed rate loan that is backed by the FHA. There are basically two kinds of home buyers who will obtain this kind of loan. First, you must have a previous or current history of serving in the military. The next type is a person who has to be a surviving spouse of a person who was in the military. There are plenty of times in which a person can get this type of VA loan and never have to put a down payment down.
Traditional Adjustable Rate Mortgage
Unlike fixed rate mortgages, adjustable rate mortgages are not that stable. The rate of interest for an ARM adjusts itself according to whatever the prevailing market rate is. Basically, your monthly payment will be influenced by the prevailing interest rate. Some adjustable rate loans have a limit on the number of interest changes that are done.
Do not forget that your monthly loan payment is the combined amount of principle and interest. Although the principle will stay the same each month, the interest portion will adjust according to the market rate. Even though most people do not prefer this specific feature when it comes to ARMS, but this kind of mortgage is still a good way to get more value or home for the money that you are dishing out. This is one of the key reasons that adjustable rate mortgages are so popular. But the life of the loan is generally for about 5 or 7 years at the most. The loan schedule has manageable payments at the beginning of the loan. But, the final payment is one huge lump sum amount. The homeowner can select to obtain a new loan or make this big payment.
Interest Only Mortgages
The loan requirements of an interest only loan mean that you only are required to make payments on the interest of the loan. After that specified amount of time, you will be responsible for paying the full monthly payments. It is the loan adjustments that make both balloon and ARM loans hard to pay in the very end.
Finally, these are some of the kinds of mortgages that people can opt for. Some will be harder to get than others. But they are there to help you achieve your dream of buying a new home.
If you are thinking about applying for a home loan you should read up as much as possible and Home Finance Assistance is the best place to start.
Under Topics: finance, home finance, home loan, loan, loans, mortgage loan,Source: http://www.vvy.in/finance/varied-kinds-of-home-loans/45418/
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