Mortgages

When you’re thinking about buying a new home, you have a few options to consider.  Every person is different and every home is different.  You must find the solution that suits your individual needs and desires.  But whatever way you cut it, homeownership is a wise investment.

Financing Options
There are many ways to finance a home.  The option that suits you best will be dependent entirely on your own situation.

Fixed Rate Mortgage - A fixed rate mortgage has an interest rate that will not change over time.  When you sign the loan, you are setting up standard payments for the next fifteen to thirty years.  Most fixed rate mortgages require at least a 5% down payment and the interest rate can be bought down by paying points at closing along with standard closing costs.

Adjustable Rate Mortgage (ARM) -Adjustable rate mortgages have an interest rate that routinely adjusts after a certain period.  The interest rate can go up or down and the payment can change accordingly.  ARMs have lower interest rates initially than fixed rate loans, but with the changing market conditions the rate (and payments) can surpass a fixed rate mortgage.  All other terms are similar to those of fixed rate mortgages.

 80/20 - If you don’t have funds for a down payment, you might consider an 80/20 loan, or rather set of loans.  This system is actually two loans.  One is twenty percent of the total home price and acts as a down payment.  The other is the remaining eighty percent of the purchase price.  Interest rates on those loans are higher than other options, and the loan still requires closing costs.

VA Loan Mortgage - If you are a veteran of the United States military, one of the perks is a veteran loan program, or VA loans.  VA loans require no down payment and have favorable financing conditions.  The buyer must only pay closing costs on the purchase of a new home.

Interest Only - Interest only loans are designed for buyers to pay only the interest on the loan for a set period of time.  For the first five to ten years of a loan, you pay a monthly payment that is only interest and does not contribute to paying down the principle of the loan.  These make it possible to buy more home, but require refinancing or discipline.

Recent Related News:

  • FHA Revamping Itself
    The current housing market problem is beginning to swell to the point that government sponsered housing programs are starting to take some action.  It is expected that US Senators will vote on a bill to modernize the federal agency (FHA) in the very near future.  It is hoped that this new bill will help the already beleaguered US housing market.
  •  Sub-Prime Losers
    A lot of news of late has been about the new sub-prime assistance plans that the White House recently announced.  On the surface, the news touted how the plan would help those with sub-prime mortgages by freezing interest rates which would have led to skyrocketing monthly payments.  The truth, however, is less shiny.
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     Today’s current housing market fiasco has created problems for many individuals and lending companies alike.  If looked on a line spectrum there are those consumers with excellent credit who will pretty much be able to ride out the storm…