Basic Types of Home Mortgages in the Market Today
If you are in search of a mortgage, it pays to understand the different types of mortgage loans available in order to determine the best and most suitable for you as an individual.
Conventional home Mortgage – this type of home mortgage is normally based on the existing market rates during applicable, and would normally have a 30-year loan tenure. The market rates are mostly determined by 10-year bond rates as the 30-year tenure loan will always be get refinancing after 20 years. With an excellent credit anyone can get this type of mortgage with anywhere between 10-20% down based on your credit score and history and of course your debt-to-income ratio.
FHA Home loans – this type of home loan is for people with great debt-to-income ratios, and are insured by the FHA meaning in the event of a default on payment, the insurance premium that you pay will be used to pay your lender by FHA. This security will allow an otherwise less qualified person to borrow a higher amount and pay a small down payment.
VA Home loans – these types of loans are meant for US Military veterans. VA loans extend conventional home loans at very affordable interest rates or at times no down payments. These loans are part and parcel of the US’ military benefits program.
Adjustable rate mortgages (ARM) – an ARM is a type of loan in which the rate is changeable depending on different factors and existing market conditions. Note that not only is the rate changing but your monthly payments could also be affected.
Interest Only Home loan Mortgage – in this type of loan, you are allowed to pay only the interest for a given period of time, normally a year. Note that the principal amount will remain untouched and you will not start to pay the loan until after a year or something. This type of loan is ideal for individuals with changing needs where they get their dream homes and have a year to prepare their finances so they cannot run into financial troubles immediately.
Bridge home mortgage – this is a type of mortgage loan where you get the chance to literally ‘bridge the gap’ between the home cost and the total cost of loan. This type of home loan is also ideal for individuals who plan on relocating but want to buy a home first before they sell their existing home. Thus, this type of loan is attached to your first property, the one that you wish to sell, meaning you use it as collateral to acquire your new home.
The market has very many types of mortgage loans, but the above-mentioned are the most common. As always, it pays to check with a financial advisor before you finally decide on the type of mortgage that is most ideal for you.
Conventional home Mortgage – this type of home mortgage is normally based on the existing market rates during applicable, and would normally have a 30-year loan tenure. The market rates are mostly determined by 10-year bond rates as the 30-year tenure loan will always be get refinancing after 20 years. With an excellent credit anyone can get this type of mortgage with anywhere between 10-20% down based on your credit score and history and of course your debt-to-income ratio.
FHA Home loans – this type of home loan is for people with great debt-to-income ratios, and are insured by the FHA meaning in the event of a default on payment, the insurance premium that you pay will be used to pay your lender by FHA. This security will allow an otherwise less qualified person to borrow a higher amount and pay a small down payment.
VA Home loans – these types of loans are meant for US Military veterans. VA loans extend conventional home loans at very affordable interest rates or at times no down payments. These loans are part and parcel of the US’ military benefits program.
Adjustable rate mortgages (ARM) – an ARM is a type of loan in which the rate is changeable depending on different factors and existing market conditions. Note that not only is the rate changing but your monthly payments could also be affected.
Interest Only Home loan Mortgage – in this type of loan, you are allowed to pay only the interest for a given period of time, normally a year. Note that the principal amount will remain untouched and you will not start to pay the loan until after a year or something. This type of loan is ideal for individuals with changing needs where they get their dream homes and have a year to prepare their finances so they cannot run into financial troubles immediately.
Bridge home mortgage – this is a type of mortgage loan where you get the chance to literally ‘bridge the gap’ between the home cost and the total cost of loan. This type of home loan is also ideal for individuals who plan on relocating but want to buy a home first before they sell their existing home. Thus, this type of loan is attached to your first property, the one that you wish to sell, meaning you use it as collateral to acquire your new home.
The market has very many types of mortgage loans, but the above-mentioned are the most common. As always, it pays to check with a financial advisor before you finally decide on the type of mortgage that is most ideal for you.
[posted by : OFP on May. 06, 2011]
TAGS: mortgage, loans, debt, market, home