Basic mortgages – What mortgages can you get for yourself?
In order to buy a house you need to get a mortgage which is basically a home
loan. Generally most people don't have the money required to buy a house,
hence they have to borrow. You usually don't get to borrow the whole amount
which is the cost of your house. For the purpose of security, you need to pay a
percentage of the total cost as down payment from your own pocket.
Nevertheless, the amount you have to borrow is quite a lot and it is one of your
most important financial responsibilities. Thus it is better that you choose the
mortgage that you would be most comfortable in paying. Here are three basic
mortgages that you can choose from.
1.Fixed rate mortgage – The traditional mortgage or fixed rate mortgage,
also known as FRM is the easiest to handle and comes with no frills. In an
FRM the interest that is decided on the mortgage in the interest prevailing
in the mortgage market at that time and this is the interest that you have to
pay throughout the lifetime of the loan. The most common FRMs are
30-year FRM, 20-year FRM, 15-year FRM and 10-year FRM. If you want to
change the interest rate in the time period of the loan, then you have to
refinance the mortgage. The best part of FRM is that it comes with a
security. You know the amount you have to pay every month and hence
even if you have any financial difficulty in any month you know how much
amount you have to gather to not miss out on a payment.
2.Adjustable rate mortgage – This is a relatively new mortgage, also known
as ARM and is flexible in terms of interest rate. This means the interest rate
keeps changing throughout the term of the loan. The rate will be adjusted
as per the market interest rate. Hence if the market interest rate rises up
very high then you have to make high payment that month and if it falls
low you have to make low payments then. Thus, there is no surety with
this kind of mortgage as your payment keeps fluctuating. A reason why
some people choose ARM over FRM is that the initial rate for an ARM is
usually lower than an FRM.
3.FHA mortgage - FHA mortgage is a government backed mortgage with the
Federal Housing Administrating taking the guarantee for such mortgages.
These are usually meant for people who have low income or low credit
score and thus is finding hard to qualify for a mortgage. A FHA loan
requires only 5% down payment as opposed to 20% down payment
required for other traditional mortgages. It also allows people to take out a
loan without a stellar credit score. It has private mortgage insurance built
within the mortgage. The interest rates you have to pay for FHA loans are
also generally lower than other mortgages.
Thus you can choose, depending upon your requirements the mortgage that best suits you.
(This guest post is presented courtesy of EasyFinance.com).
Contact the Hess Team for all Wenatchee and Leavenworth real estate.
Where is Lake Chelan? Richard Hylton knows and can help you find the best home, property, vacation rental or lot in the Chelan Washington area.
Looking for homes in Hoover AL? We have all the latest listings, buyer and seller information and more at SweethomesinAlabama.com
Contact Richard Galster to learn more on where to live in North Dakota. He specializes in all types of real estate in Minot ND, homes in Minot, and commercial property. If you're looking to buy or sell Minot real estate allow Rich to show you the keys and strategies necessary to close on time with your transaction. We are full-service real estate brokerage and your personal Minot ND Realtors.
Check out PCBeach for all Panama City Beach information and beachfront properties in Florida.