Types
of Agents
How
to Select an Agent
Prequalified
or Pre-Approved
7
Reasons to buy a home
Moving
with Teenagers
How
to Find a Home
50
"Things To Watch"
when viewing a home
9
Types of Loans You Should Know
What
is a Sales Contract
Finding
Quality Inspectors
10
Ways to Ascertain a Down Payment
How
Lenders Approve Loan Applicants
Definitions
of Closing Costs
|
Buyers' Resource Section:
-9 Types of Loans You Should Know About-
Here are nine different ways you could borrow
the money for the home of your dreams.
Conventional Fixed Rate Mortgage- Fixed rate
loan from a commercial lender for a term of 15, 20 or 30 years.
Payments, interest rates, and term are locked at initiation
of contract. Usually requires 5% down or lender insurance.
Adjustable Rate Mortgage- Or ARM
mortgage is similar in term to the conventional mortgages.
However the interest rate is only locked for a prescribed
term of 1, 3, 5, 7, or 10 years. After the initial term the
interest rate fluctuates periodically according to financial
markets. There are usually some caps on the interest rates
built into the contract.
Federal Housing Authority Loan- The
Federal Housing Authority (FHA) insures loans for lenders.
This allows lenders to justify offering larger loans with
smaller down payments. These loans are always assumable for
future buyers who qualify.
Veteran Affairs Loans- The Department
of Veterans Affairs provides government backed loans for qualified
veterans and servicemen. This type of loan allows the qualifier
to offer little or no down payment for the loan. These loans
are subject to the VA mortgage funding fee depending on the
size of the down payment. The VA mortgage funding fee is usually
equal to 1% of the loan amount.
Assumable Mortgage- Simply take
over the existing mortgage. The most common assumable mortgages
are FHA, VA, or ARM mortgages. You take the current contract,
with specified payments, interest rates, and term remaining.
The equity difference is made up in the down payment.
Wrap Around Mortgage- This form
or financing uses two mortgages to equal the price of the
home. Usually there is an Assumable Mortgage with it's specific
terms agreed upon by the first borrower and the first lender.
This portion is Assumed just as in number 5. Then to make
up the difference a new mortgage usually at a much lower rate
(due to the size) is added to the new home buyer's obligations.
Buy Down-Mortgage - Usually involves
a third party, who gives the lender money up front in return
for a lower interest rate and lower payments, or a larger
loan amount at a low rate. Your particular lender's approach
will determine whether you have a permanent buy down, graduated
or multiyear plan.
Two-Step Loan- 30 year loan that
is identical to an ARM loan except that the interest rate
is changed once over the term. The first step is usually 1,
5, 7, or 10 years of the term.
|
