Types of Home Loans
As the American economy continues to improve, getting a mortgage loan is getting more and more difficult as each day passes. Home loans can make all the difference in the world for those who are looking to buy, however, as most people would have an incredibly amount of difficulty getting a home without a little financial assistance.
While it may seem as if navigating the world of loans would be difficult if not impossible, there are a variety of home loans that can help you to reach your goals. Finding the right mortgage is all about taking into consideration every aspect of your financial situation and choosing a route that will allow you to be able to pay on time. After all, there’s nothing worse than taking on a mortgage that you can’t afford to pay, which should be avoided at all costs.
The first type of loan to take into consideration is the fixed-interest mortgage. This is the preferred type of loan for most people, as it tends to be the easiest to understand. Generally, fixed-interest mortgages come along with an interest rate that stays the same the entire length of the loan. Payments are generally made monthly, and tend to be the same across the board. The one issue that some have with fixed-interest mortgages is that they are typically front-loaded, which means the first few years of payments don’t usually touch the principal of the loan. Still, fixed-interest mortgages are generally preferred over the alternatives.
Differing from fixed-interest mortgages are adjustable-rate mortgages in that the interest rate can change over time. All ARM mortgages are different, and the way the rate can be adjusted depends mostly upon the length of the loan itself. For example, 3-year, 5-year and 10-year ARM loans are all going to come with different adjustable rates, some of which are more likely to fit your interests than others. This type of mortgage is typically called a “hybrid mortgage,” and is becoming more and more popular as time goes on. In a high fixed-rate scenario, for example, hybrid mortgages may be seen as having an advantage over the alternative.
Another alternative route to take when purchasing a home would be to get a FHA loan which is a mortgage backed by the Federal Housing Administration. This is the perfect solution for first-time home buyers who are having difficulty getting a different type of loan. It’s also an excellent option for seniors who are 62 and above and can’t quite figure out a way to afford housing. The great thing about this type of loan is that you can pay as little as 3.5% of the total cost of the home for a down payment, which is typically a far less expensive payment than most people have to deal with when paying off a mortgage. FHA loans aren’t for everyone, but they can be perfect for people who find themselves in specific situations.
If you’re looking for a mortgage, it can be difficult to find the right solution. This being said, one of the above should prove to be an excellent option – so do your research and choose carefully.
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