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Mortgage Types & Information
Are There Different Types of Mortgages?
What is a Fixed Rate Mortgage?
Having a set payment that does not fluctuate or increase gives the homebuyer stability when managing his or her finances.
Fixed rate mortgages are also based on a fixed rate loan. A fixed rate loan has an interest rate agreed upon that remains the same throughout the duration of the mortgage. Therefore, the
monthly payments remain fixed for the duration of the mortgage.
The majority of the initial payments go towards paying off the interest incurred on the loan. Once the interest is paid off, the remaining payments begin to pay off the principal. Click here if
you wish to find out more about a fixed rate mortgage.
Adjustable Rate Mortgages (ARM)
The re-evaluation is based upon the institution's current interest rate and the current market conditions. A higher interest rate would lead to the buyer having higher monthly payments and
conversely lower interest rates would lower monthly mortgage payments.
Mortgage types have a certain amount of flexibility. A homebuyer could combine features of the fixed and adjustable rate mortgage over the duration of their loan. For example, the first 15
years of a mortgage could be fixed and the remaining years could be adjusted.
Notably, an Arm usually sees the homebuyer receiving a lower initial interest rate usually in the two to three percent range. Depending on the institution, there is a wide variety of ARM's
available, most with the adjustment period occurring annually or bi-annually.
Balloon Mortgages
Which Loan is Right for Me?
It is a very wise idea to seek the knowledge of a mortgage professional. For online inquiries go to these links.
Why Get a Pre-Approved Mortgage?
Finding the home you truly want is extremely exciting and no one wants the tremendous stress of hearing that they cannot afford the mortgage on the home they so badly desire.
Being pre-approved lets you know your limitations and therefore would remove the stress of finding the perfect home only to worry about whether you would qualify for the mortgage.
Here are some common questions people have regarding home loans & mortgages and their different types.
There are three common types of mortgages. There are fixed rate mortgages, adjustable rate mortgages, and balloon mortgages. The most common mortgage is the
fixed rate mortgage.
This is the most popular type of mortgage for many good reasons. This mortgage has a set monthly payment over a set amount of time. The length of such a mortgage is typically between
15 and 30 years.
Throughout the duration of this mortgage loan, the interest rate is re-evaluated at different set intervals. After this re-evaluation, the homebuyer may pay more or less per month than
previously. This is the major difference between the adjustable rate mortgage and the fixed rate
mortgage.
In a balloon mortgage, the buyer pays equal installments over the duration of the loan. When the loan duration is over, the principal must be paid in full or as a balloon payment, or the loan
can be re-financed.
A mortgage is a big, important decision and must be a personal one made from an educated standpoint. Keep in mind how long you plan to keep the home; your current and future financial
status; any projected financial problems or exceptions.
Instead of going through almost all of the steps towards closing on a home and then applying for financing, why not do the reverse and secure your loan first? This can be done with a
Pre-Approved Mortgage Loan.
A Pre-Approval Certificate gives the seller a GUARANTEE that you can afford their home and therefore your offer is given serious attention.
By getting a Pre-Approval Certificate two obstacles are removed from your way to owning your dream home. Your purchase offer will be accepted by the seller and your loan application is already approved by a lender.
With this power you could walk away from a bargaining table and know that there is an excellent chance that this house will be yours and in perhaps as little as 30 days!
How do you get a Pre-Approval Certificate that gives your offer all this credibility?
There are three simple steps:
- Find a company who offers this unique Pre-Approval process.
- Fill out the required paperwork and forms with a loan officer.
- Within a few days, you will receive details of your approved loan and you will be issued a Pre-Approval Certificate.
You have eliminated the stress of having to supply specific information the property, getting an up-front appraisal and waiting weeks to find out if you qualify for the home you want.
Let's Review the Power of the Pre-Approval Certificate
- You have a WRITTEN APPROVAL from a lender for a SPECIFIC LOAN AMOUNT so that you know what to look for in a price range for a prospective home.
- You as the buyer have PEACE OF MIND, knowing that mortgage approval is not an obstacle in buying your home.
- Sellers know that you are serious about wanting their home and that you will have the financing to close the deal, giving you MAXIMUM CREDIBILITY in your offer.