Choosing the Right Home Loan
Choosing the Right
Type of Home Loan
What is the best type of loan for you? ARM, Fixed Rate or Combination?
Not all loans are the same, and not everyone's situation is the same.
Know what your options are so you can make an educated decision.
Fixed Rate Mortgages
How to decide on whether to choose a Fixed Rate Mortgage, or not?
If you hate to gamble, and uncertainty about your finances is not
an option, then a fixed rate mortgage is what you are looking for.
Adjustable Rate Mortgage
If you're a bit more savvy then most home buyers, and you understand
the forces at work, within the economy that affect interest rates
and the current indices, then maybe an ARM is the vehicle for you.
How do you know if a Combination Rate Mortgage is right for you?
If your current financial status demands that you know with certainty
what your interest and monthly payments must be, and you are fairly
confident your situation will improve in the next two to three years,
a combination loan is a good approach to buying a home.
Adjustable Rate Mortgage Loans
When you are choosing a loan you must decide first on whether a
Fixed Rate, Adjustable Rate or something in between best suits your
criteria. You will only be able to do this if you fully understand
the ramifications of each type of loan available. Read this tutorial
and educate yourself to each scenario.
Learn more about Government Sponsored Entities or GSEs, such as
Freddie Mac and Fannie Mae, to secure conventional loans. These government
programs can help you get better rates and smaller payments, and sometimes
put down less initially.
A Jumbo loan is one that surpasses the standards, set for loan limits,
allowed by Fannie Mae. If you have less than 20% for a down payment
that means you are not eligible for "conforming" loans and need a jumbo loan.
If you are a veteran, see if you qualify for a VA mortgage and then
learn about the benefits. You did your part, now let the VA do their's.
Go here to see how to contact the VA and find out just what the benefits
and rates are available for those who served their country well.
Interest Only Mortgages
Learn the pros and cons of an interest only mortgage and see if
it is a viable option for your current financial situation. If you
need funding for an income producing property this is a great way
Keeping in line with the old adage "Age has its privilege." the mortgage industry has structured what is known as a reverse mortgage
- RM - for people who are specifically over the age of 62. If you
are over the age of 62 and have a good level of equity built up in
your property, but a are strapped for cash, this option may be perfect
Sub Prime Mortgages
Have you been denied an FHA or VA loan due to bad credit? Are their
conventional and low down payment programs something that are out
of your reach? If so, consider applying for a sub prime loan. Agreeing
to pay the higher down payment requirement and associated higher interest
rates may afford you the ability to still secure a loan despite your
These are sometimes referred to as "80-10-10" mortgages
because they allow for both an 80% of value loan along with another
loan for 10% and a 10% down payment. Piggy Backs are also an alternative
to getting PMI, and they can bring down your overall monthly payment
No Money Down Mortgages
For people who do not want to tap into their savings, or cannot
or will not come up with a down payment, this strategy is a good one.
More readily available to those with sterling credit histories, and
people who are willing to pay a bit more on a monthly basis.