01:24:00
Potential home buyers have options when it comes to choosing the type of loan they seek from mortgage companies. Each type has its own unique advantages and disadvantages. Consumers should research the various options and choose the type of loan that suits their individual needs.
A fixed rate loan offers terms with a consistent interest rate for the life of the loan. The borrower pays equal monthly payments for the entire term with interest payments front-loaded. This means that over the first few years, a smaller portion of the monthly payment is applied toward the principal. Homeowners have an easy time budgeting for this type of loan but if interest rates fall, they are stuck with the higher rate.
Adjustable rate loans usually offer lower interest rates at the beginning but they fluctuate after that. The rate continually adjusts with a cap on the total amount it can change. Rates fluctuate according to an index based on what it costs the lender to borrow on credit markets. If a lender's interest rate increases, the lender passes the increase on to the consumer.
Loans offered by the Federal Housing Administration are specifically for buyers who cannot qualify for other types of loans. They offer a low down payment and low closing costs. At the same time, the criteria for qualifying are easier to meet. This is a great option for first time home buyers but loan amounts are typically limited.
Veterans, active duty personnel, and surviving spouses enjoy guaranteed acceptance when they apply for a VA loan. Similar to the FHA loan, the size of the loan is limited because of the more lenient requirements. These mortgages offer borrowers low down payments and low interest rates.
Mortgage companies also offer other options, including reverse mortgages, interest only loans, and balloon mortgages. Financial experts working for these companies can explain the requirements and terms associated with each type. Potential borrowers should carefully weigh the options and select the type that meets their own individual needs.
A fixed rate loan offers terms with a consistent interest rate for the life of the loan. The borrower pays equal monthly payments for the entire term with interest payments front-loaded. This means that over the first few years, a smaller portion of the monthly payment is applied toward the principal. Homeowners have an easy time budgeting for this type of loan but if interest rates fall, they are stuck with the higher rate.
Adjustable rate loans usually offer lower interest rates at the beginning but they fluctuate after that. The rate continually adjusts with a cap on the total amount it can change. Rates fluctuate according to an index based on what it costs the lender to borrow on credit markets. If a lender's interest rate increases, the lender passes the increase on to the consumer.
Loans offered by the Federal Housing Administration are specifically for buyers who cannot qualify for other types of loans. They offer a low down payment and low closing costs. At the same time, the criteria for qualifying are easier to meet. This is a great option for first time home buyers but loan amounts are typically limited.
Veterans, active duty personnel, and surviving spouses enjoy guaranteed acceptance when they apply for a VA loan. Similar to the FHA loan, the size of the loan is limited because of the more lenient requirements. These mortgages offer borrowers low down payments and low interest rates.
Mortgage companies also offer other options, including reverse mortgages, interest only loans, and balloon mortgages. Financial experts working for these companies can explain the requirements and terms associated with each type. Potential borrowers should carefully weigh the options and select the type that meets their own individual needs.
About the Author:
Learn more about Mortgage Companies. Stop by Swan Financial to learn more about a Mortgage Lender and what they can do for your financial needs.
0 comments:
Post a Comment