5 Popular Mortgage Loans
Most homeowners, especially new ones, have a major expense that they have to plan for — their mortgage loan payment. This is a critical payment that must be made in order to pay off the loan that was used to fund the purchase of their home. Mortgage brokers are financial professionals and advisors who can help people get a loan and manage their mortgage payments effectively. Many homeowners today take advantage of these assisted mortgage services.
A broker can help with all phases of budgeting and planning and management of the mortgage loan. They can help you determine the average downpayment on house options in your area and can also assist with comparing average home loan down payment requirements from various lenders. This expert insight can help ensure you get the best rate and do not end up overpaying in fees and high interest rates.
Working with a skilled and experienced mortgage broker can make it easier to calculate the average cost of the mortgage as well as the average interest on house loan totals. You can start planning for your purchase today by contacting a skilled and experienced broker in your area.
Are you considering moving to nashville? Do you need a mortgage but aren\’t sure which one is best for you? There are several types of mortgages and nashville mortgage companies are plentiful but finding the best mortgage rates will take a little digging. Making sure you are knowledgeable about the mortgage process and requirements will enable you to make a more informed decision. To compare mortgages you first need to have a sufficient down payment Even though down payments vary by lender, the least down payment you will need is 3.5% on average. Secondly, know what types are of loans are available, these are the five most common types of mortgages.
- Fixed-rate mortgagesThe first and most popular choice, even after borrowers compare mortgages, is the fixed rate mortgage. As the name implies the interest rates for this option will be the same throughout the life of the loan. You have an option for different term lengths which is generally 30 (the most common), 15, and 10. The longer the term the lower your monthly payment will be but you can build equity quicker with a shorter term. With fixed rate mortgages you have the advantage of knowing exactly what you will be paying every month as it will not fluctuate.
- Adjustable-rate mortgages (or ARMs)This type of loan comes in second in popularity, you get the loan at a fixed rate for an agreed upon amount of time but afterward, the payments vary monthly, which means you could be paying significantly more if interest rates rise. ARMs are appealing for some because if the interest rates fall they get a lower monthly payment and they also allow the buyer to qualify for a much larger loan. Paying a little more every month to build equity can come in handy for when the market dips and interest rates start to rise.
- Balloon mortgagesA Balloon mortgage is also a type of loan that offers low payments for a fixed amount of time, the way it differs from other types of fixed-rate mortgages is after the end of this set time period, which is usually around three to 10 years, the lump sum of the balance on the loan will be due. Selling or refinancing into a new mortgage is usually what borrowers do by the end of the term. Because of the risk involved, Balloon mortgages aren\’t as popular as they used to be.
- 2-step mortgagesAnother type of fixed-rate mortgage where the monthly rate and payment will stay the same for an initial period. After this first initial period there will be an adjustment on the rate and payments of the loan, which will then be fixed, hence the name 2-step mortgage. If you can handle having one adjustment during the life of your loan this is another good fixed-rate option if you\’re not partial to the idea of fluctuating interest rates on home loans.
- 5/25 mortgagesThis type of mortgage is a hybrid, with the five referring to the number of years the loan has a fixed rate and the 25 is the number of years that it has an adjustable-rate. A buyer may consider taking advantage of this mortgage type when they compare mortgages because of the low fixed-rates available in the first five years, especially if they plan to refinance or sell in that time. In case you\’re wondering, home refinance is when you have access to a new mortgage agreement, for example, turning an adjustable rate into a fixed rate.
When applying for a mortgage you can help offset a low credit score with a greater down payment, but it is very important that you stay with your job as long as you are going through the process of acquiring a mortgage, changes in employment can stop it completely or drag the whole thing out. Now that you know a little about the different types of loans you have to choose from it will be easier to compare mortgages to find what\’s best for you. Buying a new home is a very exciting endeavor, why not find a good mortgage company and start today?