Different Types of Mortgages
There are different types of mortgages which are available today. It is actually on your advantage to know about every mortgage type prior to looking for the next property. A lot of people actually applies for fixed-rate mortgages. With a fixed rate mortgage, the interest rates actually stays the same for most of the term of the loan, which actually ranges from 10 – 30 years. An advantage with this kind of mortgage is that you will be able to know how much the mortgage payment is going to be and you will also be able to plan for it, though the property taxes and home owners insurance changes during the time of the repayment term of the mortgage.
A good advantage of ARM is where you could afford the more expensive homes because an initial interest rates are actually lower. You may likewise find several government mortgage programs that actually includes the Veteran’s Administration’s program, the Department of Agriculture program, the conventional loans and the Federal Housing Administration mortgages. It is important that you discuss your financial situation with the real estate broker on the different loan options before you start on shopping for a mortgage.
The following are brief descriptions about the main type of mortgages:
A conventional mortgage loan will need a minimum of 3{037aef49a4ca1366ab9aded5675f252e7f852a6556e9ca9d2bf74969867d7f92} down payment. The private mortgage insurance (PMI) is needed unless there’s a 20{037aef49a4ca1366ab9aded5675f252e7f852a6556e9ca9d2bf74969867d7f92} down payment or when the lender paid, PMI is offered by the mortgage company. Mortgages also are being offered for the owner occupants or for the investors.
There’s likewise the FHA financing where this needs a minimum of 3.50{037aef49a4ca1366ab9aded5675f252e7f852a6556e9ca9d2bf74969867d7f92} down. The FHA will allow approved nonprofit organizations and also for family members to assist the homebuyer with the down payment requirement. Another thing is that there’s the need for an upfront and monthly mortgage insurance. An owner occupied financing that’s being offered.
Another is the veterans administration where honorably discharged veterans or an active-duty personnel in the military who has met the qualifications are eligible for the no down payment mortgage financing. But, this will however need an upfront funding fee unless the veteran was disabled. This will however not need any monthly mortgage insurance, but will only be made available for owner occupants.
The last one would be the USDA financing to where this kind of program is made available through the United States Department of Agriculture. Such loan type will allow zero down financing for owner-occupied properties at designated rural areas.
Every one of such loan types will offer various features and you need to research well first in order to determine which of the loan type will fit with your financial situation.