If you have been planning to buy a house, then choosing a mortgage loan program can prove to be quiet beneficial for you. However with the availability of a large type of loan programs, it becomes difficult to choose the right type. This article deals with different types of loan programs that can help a buyer to buy his dream house.
Fixed rate mortgage type
This has been one of the most preferred loan types. In fixed rate mortgages, a person can repay the debt in equal monthly installment over a given period of time. The interest rate remain fixed therefore if the market experiences an increase or decrease in the interest rate, the fixed rate borrower is not affected by it.
The second most popular type is the FHA mortgage loans which are government insured. FHA is not involved in granting loans however they insures loan. FHA loans can be availed by anybody and they are not limited to first time property buyers. People having low credit score can also qualify for the FHA loans.
VA loans are available to the veterans who were once a part of the army. These types of loans are also available to the spouses of the decreased veterans. The requirement to avail this loan can vary depending on the number of years served in the army and whether the discharge of a person from the duties was honorable or dishonorable.
One of the main benefits to the borrower of VA loan is that there is no need of making a down payment. Department of Veteran Affairs, grant the loan while a conventional lender funds it. This is one of the most flexible types of lending option which is available in the market.
Interest only mortgage
The name “interest only mortgage” is a misnomer as this loan type is not really interest only type. In this type of loans, the borrower is allowed to make interest only payments but only for a specific period of time. Generally this time period lies between 5 to 10 years. This type of loan is beneficial for all those who are planning to buy their first house. By availing this loan, the home owner is set to pay lower payments in the initial years which can gradually increase.
Adjustable rate mortgage
The interest rate in the adjustable rate mortgage keeps on fluctuating with the market trend. The rate of interest can fluctuate monthly, annually or it can even remain fixed. People opting for this loan type can even refinance their loan to fixed rate mortgage, if they can afford higher loan payments.
With the availability of different types of loan available in the market, it has become easier for the buyers to buy their dream house. Buyers also have the choice of opting for reverse mortgage, which can be availed after the age of 62. The interest type of this type of loan can be adjustable or fixed.
So the next time you want to take up a loan, choose the one that suits your requirements and needs. Remember to choose a loan type wisely.
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