When it comes to offering loans to potential homeowners, mortgage companies have a variety of options. Interest rates and terms vary according to the type of loan and each has its own unique set of requirements for approval. Consumers should research all the various types to have a clear idea of which loan is the best for them.
A fixed rate loan offers terms with a consistent interest rate for the life of the loan. The borrower pays equal monthly payments for the entire term with interest payments front-loaded. This means that over the first few years, a smaller portion of the monthly payment is applied toward the principal. Homeowners have an easy time budgeting for this type of loan but if interest rates fall, they are stuck with the higher rate.
An adjustable rate loan allows consumers to take advantage of interest rate fluctuations. The rate on the loan will adjust regularly throughout the entire term but a cap is set on how much it can change. Lenders typically offer lower rates to start with than on a fixed rate agreement. The downside is payments will increase as interest rates rise.
Loans offered by the Federal Housing Administration are specifically for buyers who cannot qualify for other types of loans. They offer a low down payment and low closing costs. At the same time, the criteria for qualifying are easier to meet. This is a great option for first time home buyers but loan amounts are typically limited.
VA loans are guaranteed for veterans, surviving spouses, and active duty personnel. Borrowers can receive competitive rates and low down payments. Like an FHA loan, loan sizes are limited.
Other options include interest only, balloon mortgages, and reverse mortgages. Potential home buyers can talk to experts at mortgage companies for more information about the various types of loans available. These professionals will review the terms and help consumers choose the loan that best fits their financial situation.
A fixed rate loan offers terms with a consistent interest rate for the life of the loan. The borrower pays equal monthly payments for the entire term with interest payments front-loaded. This means that over the first few years, a smaller portion of the monthly payment is applied toward the principal. Homeowners have an easy time budgeting for this type of loan but if interest rates fall, they are stuck with the higher rate.
An adjustable rate loan allows consumers to take advantage of interest rate fluctuations. The rate on the loan will adjust regularly throughout the entire term but a cap is set on how much it can change. Lenders typically offer lower rates to start with than on a fixed rate agreement. The downside is payments will increase as interest rates rise.
Loans offered by the Federal Housing Administration are specifically for buyers who cannot qualify for other types of loans. They offer a low down payment and low closing costs. At the same time, the criteria for qualifying are easier to meet. This is a great option for first time home buyers but loan amounts are typically limited.
VA loans are guaranteed for veterans, surviving spouses, and active duty personnel. Borrowers can receive competitive rates and low down payments. Like an FHA loan, loan sizes are limited.
Other options include interest only, balloon mortgages, and reverse mortgages. Potential home buyers can talk to experts at mortgage companies for more information about the various types of loans available. These professionals will review the terms and help consumers choose the loan that best fits their financial situation.
About the Author:
Want to find out more about Mortgage Companies? then visit Swan Financial for your mortgage and financial needs.
No comments:
Post a Comment