Are you in the market for a new home mortgage? If so then you have plenty of options available to you. So how do you know which one is going to work the best for you? And what will these types of loans mean to you over the long haul?
FHA Loans – These types of loans are available for anybody who has a fairly decent debt-to-income ratio. The FHA covers these loans they do not make them. They pay if you default. They use money obtained from insurance premiums they charge everybody for their FHA loans. This kind of security helps homeowners to be able to borrow more money than they could on their own with the lower down payments (3% rather than 10% to 20%). These loans are definitely for everybody because the insurance premium may not fit their budget.
Conventional Mortgages – These mortgages are always based on market rates for the time you make the purchase. They usually are for a 30 year term for new homes, and these specific rates will be determined mainly by 10-year bond rates. This is because a typical 30-year loan most often will be refinanced about every ten years. Nearly anyone who has decent credit can obtain a conventional new home mortgage loan for a 30-year term if they have 10 to 20 percent down. This still depends on your credit history and score, and your debt-to-income ratio.
Interest-Only Mortgages – This is a type of loan where over a short period you pay only on the interest. They have the same principal but the actual loan doesn’t really start being paid back for around a year. These loans help people who have changing needs to buy their dream homes and not run directly into financial hardship.
Bridge Mortgage – These loans help homeowners to ‘bridge that gap’ that exists between what their new home costs and what the total sum of the loan is. Bridge loans are helpful to people who are needing to relocate and need to buy a home even before they sell the one they have. These loans attach to the first home that people are attempting to sell. This means you can move while using the old home as the collateral for obtaining a loan on your new home.
Adjustable Rate Mortgages – ARMs are loans with rates that change with the market conditions. They can also change your monthly payments as well, either up or down. One month you may be fine, the next monthly you find yourself behind.
No Closing Cost Loan – These loans really sound like a good deal. Having no closing costs, credit check fees, or paperwork fees, but keep in mind that none of it actually comes for free. Your interest rate will make up a lot of these ‘no cost’ benefits. It will cost you more per month so it is like just paying these costs over time.
Jumbo Loans – A Jumbo loan is any loan that exceeds $350,000. This amount changes when the market does. These loans also come with special rates.
There are all kinds of mortgages out there, so do your research before you decide which one is ideal for you.