Different Types of Mortgages
When it comes to mortgages, there are actually various types of it that are available. It’s within your advantage to know about each mortgage type before your start on looking for the next property. Many people actually considers applying for fixed-rate mortgages. With fixed rate mortgages, the interest rates stays the same for most term of the loan, which 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 about an ARM is that you will be able to afford the more expensive homes because its initial interest rates are lower. There are also several government mortgage programs that includes the Department of Agriculture program, Veteran’s Administration’s program, 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.
In the article below, you will be able to know about the main types of mortgages:
A conventional mortgage loan will need a minimum of 3% down payment. A private mortgage insurance (PMI) is actually needed unless there will be a 20% down payment or if the lender paid PMI is offered by the mortgage company. Mortgages are also offered for investors and the owner occupants.
There is also the FHA financing where it requires a minimum of about 3.50% 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. Owner occupied financing is the only thing being offered.
Another type would be the veterans administration where any honorably discharged veterans or the ones that are still in active duty in the US military and met the specified qualifications are qualified with no down payment mortgage financing. But, this will however need an upfront funding fee unless the veteran was disabled. This actually doesn’t need monthly mortgage insurances, but is only made available for the owner occupants only.
The last one would be the USDA financing program where it’s made available through the United States Department of Agriculture. A loan type like this will allow zero down financing for owner-occupied properties at some of the designated rural areas.
Even though these types of loan area able to offer different features, you should however do your research first so you are able to know which of such loan type is going to fit well with your financial situation.