5 types of mortgage loans…find the one that fits you like a glove!
November 12th, 2007 Categories: Dripping Springs Real Estate News
Don’t you hate it when you are wearing something that does not fit you properly? It can drive you bonkers all day! Now why would you get a home loan that does not fit you properly and be uncomfortable for the next 30 years?
Mortgage lenders offer many features and restrictions that can be added to a variety of mortgage programs, but the following five mortgage loans are the basic types you will encounter. No single loan is best for all circumstances, but here you’ll see what specific loan types work better than others depending on individual circumstances and lifestyles.
1. Buying for the long Haul : Loan to consider: 30-year fixed rate
Why: Financial peace of mind can be worth the higher interest rate that comes with an interest rate that won’t change for three decades.
2.Self - Employed : Loan to consider: No- or low-documentation loan
Why: Though you’ll pay a higher interest rate, not having to produce paycheck stubs or employer references, as you would be expected to supply when applying for a traditional loan, can be a huge help to those with variable incomes.
3. The Recent Graduate : Loan to consider: One-year ARM
Why:Stretch your dollars with low interest rates during the years when your income is at its leanest. Your rate can go up (or down) each year, but interest-rate caps will limit that change to a predictable amount, and your rising income should be able to handle it. Watch out for loans that don’t cap the interest rate but instead cap your payment. They could cause your indebtedness to grow even as you make monthly payments. ARMs also come in varieties that adjust — up or down — every six months, or even more frequently.
4. Relocation & Short Term : Loan to consider: Interest-only mortgage
Why: While these loans can be risky for novice borrowers or those stretching to afford a home, they can be a smart tool for financially sophisticated borrowers who already have assets built up. Monthly payments are low because you’re not repaying principal, so you can afford a larger loan. If you eventually sell the home for less than you paid, however, you could have to take money out of savings to pay back the full amount owed on your mortgage.
5. Refinancing (getting ready to retire) : Loan to consider: 15- or 20-year fixed or adjustable rate mortgage (ARM)
Why:You can retire the loan before you retire from your job. A fixed rate generally costs more than an adjustable, but will give you more certainty in budgeting. However, if ARMs are significantly cheaper and your income can handle possible payment increases, you could save with the adjustable rate.
These are just some of the mortage loans that are availalble today. That’s why the Steele Action Team is committed to finding you the right financing, before we find you the right home!
Call today to see what loan program would fit you like a glove, or just call us for any of your real estate needs. We would love to help!
Jeremy K. Frost ~ REALTOR & Real Estate Blogster 512-636-2746
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