What Type Of Mortgage Loan Should One Go For?
October 12th, 2009 | by Qurratulain |
You’re looking for the best deal of mortgage loan purchase, but standing nowhere, as you don’t know where to start! In this situation, it’s very important to know the right type of mortgage loan. If you’re first time home buyer, and don’t know where to start, here’s a quick overview of types of mortgage loans. Knowing these types, you can better decide. Here it goes:
Fixed Rate Mortgage
A fixed loan rate remains unchanged throughout the life of mortgage. The payments you make remain the same every month. This helps in making you organize your budget accordingly, giving you less worries. This loan is the safest kind of mortgage loans. A fixed rate loan involves the following:
- 30 Year Fixed Rate Mortgages (360 Installments)
- 15 Year Fixed Rate Mortgages (180 Installments)
- Biweekly Mortgages
- Convertible Mortgages
Adjustable Rate Mortgages
These loans are quite flexible in nature and adjust to the latest market trends. The best thing about such loans is that they are bendable to your situation. You can select the mortgage loan you require when interest rates are quite low and get it adjusted throughout the loan term.
ARM’s have interest rates that change according to financial indexes determined by the current market. This indicates your payments can rise or fall depending change in index. This may often lead to unsteady payments so the home buyer must be prepared in advance. If your financial situation forces you to choose this kind of loan, you don’t have to worry, you can always re-settle the terms or refinance later to get a much better deal.
FHA Loans
Preference towards FHA (Federal Housing Administration) loans is increasing day by day. The reason is that they secure and reliable, both in terms of borrower as well as the lender. These loans are insured by the US Government, therefore borrowers find it convenient than other conventional loans, and for lenders it reduces borrower’s risk of default payments.
If you are looking to purchase home with the lowest possible down payment or your credit is not perfect, or you want to have mortgage loan refinancing - FHA loans will be a sensible option to make. You’ll have following benefits out of an FHA Loan:
- Low down payments
- Low closing costs
- Low mortgage insurance
- No credit score requirements
- Easy terms and conditions
Be sure to have accurate FHA loan rates, before making purchase. Better is to use some FHA Loan calculator for further help.
VA Loans
A VA (Veterans Administration) loan provides low-cost insured home mortgage loans. To qualify for a VA mortgage loan, you must be a veteran, military-related individual or their spouse. VA mortgage loans offer many benefits and protections that other loans don’t, including:
- Credit Flexibility
- Great Interest Rates
- No Down Payment
- No Mortgage Insurance
- Low closing costs
Reverse Mortgage
A reverse mortgage is a loan made to older Americans who want to obtain equity from their homes in the form of cash. These loans are basically intended for retired people who may need the money to enhance retirement pensions, Social Security, or for medical purposes.
