Knowing the Various Types of Mortgages
There are various types of mortgages that are available. It’s within your advantage to know about each mortgage type before your start on looking for the next property. There are many people who 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 through this kind of mortgage is that you will know how much the mortgage payment will be and that you could plan for it, but the property taxes and homeowners insurance may change during the repayment period of the mortgage.
One advantage of an ARM is that you could afford the more expensive home because the initial interest rates are 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’s essential that you try to discuss first your financial situation with the real estate broker about the various loan options prior to starting on your shopping for mortgages.
The following are brief descriptions about the main type of mortgages:
Conventional mortgage loans 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 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% down. The FHA likewise will allow approved nonprofit organizations and family members in assisting homebuyers with down payment requirements. An upfront and monthly mortgage insurance also is needed. It’s an owner occupied financing that’s 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 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 program where it’s made available through the United States Department of Agriculture. This kind of loan type allows zero down financing for the owner-occupied properties in some 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.