Getting a home mortgage is among the major steps taken by many toward getting a home of their own. Complex as it may seem, the good news is that there are many options to choose from. And with a trusty real estate agent by your side from the start of your real estate journey, they can help you out in finding the ideal mortgage terms and programs to suit your lifestyle and financial capacity.
Here are several types of home mortgage loans that are available for any kind of homebuyer, whether they’re first-timers or long-time investment seekers.
These are among the most common types of mortgages available to homebuyers.Mortgage terms – the span of time wherein you pay your loan – are usually in 15- or 30-year periods. The longer the mortgage term, the smaller monthly rate you have to pay – and vice versa. It’s called a fixed-rate loan because all throughout the life of your mortgage you’ll be paying the same interest rate.
The FHA (Federal Housing Administration) loan is the most ideal type of loan forthe credit-challenged and the first-time homebuyers. This particular loan is insured by government and issued by FHA-affiliated lenders. You only need to make a 3.5% down payment for a home. Even if your credit score is below the standard 670, you can still qualify for the said loan. The catch is that the requirements for this can be quite stringent.
This type of loan makes sense for those who need some time before they start making larger payments for the mortgage. For five to seven years, you only need to pay the interest of a mortgage at a fixed rate. Once the term for this loan is over, then the principal loan is paid. However, you will have to pay an extra sum for the monthly payment of the principal.
For this mortgage type, your payment moves with the ups and downs of market indices. There are set times for adjustment of the interest rate to occur – monthly, semi-annually, or annually. There is also a grace period where you can still pay at a fixed rate – usually during the first few monthly mortgage payments. If you’re adept in following market trends and would like to take advantage of low interest rates as dictated by market movements, then this loan is for you.
Combo or “piggyback” mortgage loans
This is called a combo or piggyback loan because you are taking out not just one but two loans to finance your home purchase.
The standard down payment for a home is 20% of its total price. If you’re not able to come up with this sum immediately, you can still proceed with the home purchase but with the private mortgage insurance. However, when you present a piggyback mortgage, the PMI will no longer apply. This is a great strategy for those taking out jumbo loans so they can pay for the home they want in the quickest time.
If you want a detailed explainer of the concept of home mortgage, make sure you talk to the right people who can explain this clearly to you. Depend on us, the Wanda Charles Group, to give you all the information you’ll need. Call us at 317.674.6949 or send an email to wanda(dotted)charles(at)cbdfw(dotted)com today.