How to Find the Right Mortgage Loan for Your Needs
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When you start shopping for a mortgage loan, don’t assume that any home loan will do. There are several types of lending packages for people who want to buy a home, and it pays off to research the various options so you can get the best deal for your mortgage needs.
Home Equity Credit Line
If you are looking to buy a second home for vacation getaways or investment, you might be eligible for a home equity credit line on your main residential property.
If the home where you live has enough equity built up, you could possibly get a credit line that would cover the cost of a second home.
However, if you are looking for a mortgage for a residential property for yourself, this option will not work.
FHA Mortgage Loan
Unlike a regular conventional home loan, a Federal Housing Administration mortgage loan is backed by the federal government to provide opportunities for people with lower incomes to buy a home.
Geared mainly toward first-time homeowners, the buyers must agree to live in the home for at least a year rather than flip it or rent it.
Eligibility is based on income and expenses along with the borrower’s credit score obtained from credit reports.
Two-part mortgage insurance is usually required to help protect the lender.
Adjustable Rate Mortgage (ARM)
An adjustable-rate mortgage is a home loan with an interest rate that can fluctuate.
There are different types of ARM mortgages. Some offer a fixed rate for a specific period of time like five years.
Then the interest rate may go up, or it may change periodically or even monthly.
For this type of loan, the borrower needs to understand the terms that will apply over the life of the loan.
For home buyers who prefer a short term interest rate that is higher or lower than the subsequent remainder of the loan, this option can be helpful.
Borrowers should consider the best loan option from the selection of available mortgage programs.
Fixed Rate Mortgage
As its name implies, a fixed-rate mortgage will maintain the same interest rate for the duration of the loan.
Many borrowers prefer this type so they can plan the mortgage payment within the monthly budget.
Others that may be facing a change of finances, such as paying college tuition for teens or preparing to retire, might want to consider an interest rate that will adjust to a lower rate following the initial interest rate period, if feasible.
Securing a mortgage loan should be carefully thought out. Don’t just choose any mortgage loan to buy a house.
Look for one that meets your specific financial needs.
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Category: Mortgage
