A home mortgage loan is likely the biggest financial decision an individual will make in their entire life! Therefore, it is critical that mortgage loans be chosen wisely. Not all mortgage loans are the same. In fact, there are a variety of mortgage loans on the market today, many of which have steep interest rates that will end up costing more than the price of the home. It is critical that mortgage loans be specifically tailored to help the homeowner achieve their financial goals. Being well educated and employing a reputable mortgage company are some of the most important steps to ensure a secure financial future.
Numerous mortgage companies offer mortgage loans promising the lowest rates on the market and the most superior customer service, so how does one know which loan program is best for them? A prospective buyer should have their expectations clearly mapped out in their mortgage goal. Then based on the main objective of their goal, resources available, and even tolerance for risk they can better decide on a suitable mortgage loan.
A trusted mortgage company will help their clients evaluate their financial situation, as well as offer financial tools such as monthly payment and affordability calculators. To ensure that mortgage loans are selected that help meet an individuals financial goals, it is important to understand the various loan programs available. The two primary types of mortgage loans are fixed rate and adjustable rate. Fixed rate mortgage loans offer a stable interest rate along with a principal and interest payment that wont change over the life of the loan. An adjustable rate mortgage loan typically begins at a lower interest rate and then adjusts periodically after the introductory period is over. Each option has benefits depending on the prospective homeowners situation and financial goals. Below is a list of additional loan products and their associated benefits:
– Conventional Loan: Conventional mortgage loans are offered by banks and mortgage companies and are not insured by the federal government. Fees and closing costs are generally lower and, because conventional mortgage loans have stricter requirements, buyers get a head start over other buyers with lesser qualifications.
– FHA Loan: A FHA loan is a Federal Housing Administration mortgage insurance backed mortgage loan, which is provided by a FHA-approved lender. These loans are great for those with lower income as they allow home buyers to buy a home with a down payment as small as 3.5%.
– VA Loan: A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs (VA). These loans offer long-term financing to eligible American veterans or their surviving spouses. The most significant benefit of a VA loan is the borrower’s ability to purchase with no money down.
– Homepath Mortgage Loan: Homepath financing is a loan for Fannie Mae foreclosed properties. They offer low down payments, no mortgage insurance, as well as expanded seller contributions.
– Reverse Mortgage: Reverse mortgage loans are available to people over 62 years of age. They enable a borrower to convert part of the equity in their home into cash. This type of mortgage loan helps people near retirement with limited income use the money they have put into their home to pay off debts, cover basic monthly living expenses or pay for health care.
– Balloon Mortgage: Balloon mortgage loans are short-term, fixed-rate mortgage loans that offers a lower interest rate throughout repayment, but requires a lump sum payment due at the end of a specified term.
– Jumbo Mortgage: Jumbo mortgage loans are loans above the maximum loan amount established by government-chartered corporations Fannie Mae and Freddie Mac. A benefit of this loan program is that it enables buyers to purchase a more expensive home.
Additional loan products including interest only loans, cash-out refinances, vacation home financing, as well as investment property financing are also available to help buyers achieve there financial goals.
Mortgage loans are a huge financial decision, so being well educated and working with a mortgage company that focuses on positioning clients toward security is vitally important. The time has never been better to buy and with the wide range of mortgage loans available people with all different financial situations are now able to qualify.