If you should happen to be looking at mortgages, there a number to choose from. All of them can be used to purchase a home. It is advisable to learn about all of them before you sign on the dotted line. There are five different loans but only two that are used regularly.
The vast majority of people will opt for the fixed rate mortgage. There are no surprises with this loan as both interest rate and payment are fixed. You will pay the same amount month after month until the loan is paid in full.
The second most popular mortgage is the ARM or adjustable rate mortgage. This mortgage can be set on a one to five year schedule. The interest is a bit lower to begin with but is only effective for the specific time period you choose for the ARM. In recent years the poor economy has made the ARM a good choice, as the payment would drop at each interval.
The interest only mortgage may be to ones liking. The borrower will pay a significantly low interest payment for a specified period of time. When that term ends, your payment will rise sharply as you begin paying off the principal along with any remaining interest. Ask for an estimate to be sure this payment amount is affordable and well within your budget.
A balloon loan has some benefits along with drawbacks. Set up for 5 to 10 years, payments are made with a very low interest rate. When this time period expires, the bank will want the balance of the money owed paid off in full. If a persons credit is good, the lender will consider refinancing the loan. Otherwise, one could be forced to sell the house to pay off the bank.
There are many elderly couples with little income on which to live. The reverse mortgage was set up for these seniors. They money is borrowed against the value of their home and funds are paid weekly, monthly, or in a lump sum to supplement their income. If they sell, move, or die, the bank will must be paid their money immediately. Use caution with all loans and be sure you know what you are doing.
The vast majority of people will opt for the fixed rate mortgage. There are no surprises with this loan as both interest rate and payment are fixed. You will pay the same amount month after month until the loan is paid in full.
The second most popular mortgage is the ARM or adjustable rate mortgage. This mortgage can be set on a one to five year schedule. The interest is a bit lower to begin with but is only effective for the specific time period you choose for the ARM. In recent years the poor economy has made the ARM a good choice, as the payment would drop at each interval.
The interest only mortgage may be to ones liking. The borrower will pay a significantly low interest payment for a specified period of time. When that term ends, your payment will rise sharply as you begin paying off the principal along with any remaining interest. Ask for an estimate to be sure this payment amount is affordable and well within your budget.
A balloon loan has some benefits along with drawbacks. Set up for 5 to 10 years, payments are made with a very low interest rate. When this time period expires, the bank will want the balance of the money owed paid off in full. If a persons credit is good, the lender will consider refinancing the loan. Otherwise, one could be forced to sell the house to pay off the bank.
There are many elderly couples with little income on which to live. The reverse mortgage was set up for these seniors. They money is borrowed against the value of their home and funds are paid weekly, monthly, or in a lump sum to supplement their income. If they sell, move, or die, the bank will must be paid their money immediately. Use caution with all loans and be sure you know what you are doing.
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