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WHAT YOU SHOULD KNOW ABOUT MORTGAGES 

Mortgages

It is important to find the mortgage that works right for you. Much of it depends on how long you expect to live in the home, how much of a down payment you can put on the home, and your credit background. Here is some information to give you a basic understanding of what is out there. When you are ready, I can help connect you with a mortgage professional who will help you determine what type of loan will work best for you.

Fixed-Rate Mortgages

The interest rate is fixed for the duration of the loan. This type of loan may work well for those home buyers who will be staying in the home for greater than seven years and who prefer the security of having the same monthly payment over the life of the loan.

Adjustable-Rate mortgages

Adjustable rate mortgages have a variable interest rate which can adjust up or down. However, most adjustable rate mortgages (ARMs) generally have a fixed portion where the interest rate stays fixed for a certain amount of time but then begins to adjust the rate up or down with general interest rates once the fixed period has expired. A common example is the seven year ARM (Adjustable Rate Mortgage). The interest rate is fixed for the first seven years, but then will become adjustable. The interest rates on ARMs is commonly lower than fixed-rate mortgages and therefore become an attractive option to those who are planning to refinance or move before the fixed period of the adjustable-rate mortgage.

Negative Amortization loans

These loans currently are receiving some bad press because the wrong type of people or people in the wrong types of circumstances have been put in them. They only work for a small class of homebuyers, though they often can work really well for real estate investors (link to investment page where it will talk about Negative Am Loans). Negative Amortization loans are loans where they monthly payment is smaller than the total interest accrued for the month.

Government loans

Two additional options open to first-time home buyers or to veterans are the FHA and VA loans.

FHA Loans - FHA stand for the Federal Housing Administration who provides some lower down payment options for first-time home buyers and has a number of different options to try to help first-time buyers get into a home. A good mortgage professional will have the FHA loan option available to them and when you sit down to discuss what loan would work best for you, the mortgage professional should be able to help you determine if an FHA loan is right for you.

VA Loans - Veterans can often qualify for a loan from the Veterans Administration. This used to be a very attractive option because of the 100% financing option available through the VA loan, but with conventional financing also now competing very heavily for 100% financing loans, VA loans have become much less common but sometimes make the right fit for someone. Consult with your mortgage professional or allow me to set you up with one that I know who should help get you some great advice on what may work for you.