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A home is the largest purchase that most of us will make during the course of our lives, and often, it is one of the most important. This makes choosing the mortgage loan that covers the cost of this house one of your most important decisions as well. Since there are many types of mortgage loans, you should be able to find one that suits you.
An adjustable rate mortgage has an interest rate that changes with a predetermined index. This means that the interest rate will most likely change over the life of the loan, and that monthly payments will not remain the same from one period to the next. These periods between rate adjustments can be as long as five years or as short as one year. The disadvantage with an adjustable rate is obvious: you can not predict how the index with fluctuate and rates could rise, but adjustable rate loans come along with a rate cap to keep your rate from going too high. Also, adjustable rates usually come with an low introductory rate, and if rates were to drop, someone with an adjustable rate could end up paying less than someone with a fixed rate. An adjustable rate is also good if you plan on moving five to seven years after buying the house.
A construction loan covers the cost of the materials, labor and land needed
to build a new home, giving you the opportunity customize your new home.
An FHA loan is insured by the Federal Housing Administration which is a
part of the Department of Housing and Urban Development in effort to provide
families with low income mortgages that require only very low down payments.
The FHA also has special low interest, low down payment loans available for
teachers and police officers.
A VA loan is insured by the Veterans Administration and provides a low interest
low with no required down payment. A VA insured loan is available if you have
served in the military.
Finding a mortgage loan can be more daunting than find a home. You want to be careful in both decisions since you will have to live with both for at least the next five to 30 years. Having realistic understanding of exactly what mortgage loans entail and exactly what you are looking for will help you through this process. Fill out our free short form to contact an expert about mortgage loans.
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