What Type of Mortgage Loan Would Work Right For You?

11/09/2011

Mortgage LoanHomeowner need to decide on which home mortgage loan will work right for them. The next step is submitting an application. While the loan process is designed to be easy and simple it is still not a process to be taken lightly.
Here is a short overview of current available loan types:

Conventional/Conforming Mortgage – Loans are our most common forms of mortgages. They include fixed rate mortgages which are the most popular of the loan programs. If you have a mortgage loan that is conforming, then you will find it easier to locate a lender than you would if it was non-conforming. With conforming loans it doesn’t matter is the loan is adjustable rate or fixed rate, but more borrowers go for the fixed rate than any other loan product.

Conventional mortgage loans have several lives. The most popular one is the 30 year loan. One huge benefit of 30 year mortgages is that your monthly payments are lower across the life of the loan. There are 30 year mortgages are available in the Conventional, VA, Jumbo, and FHA loans. The 15 year loans are the cheapest way to go but only if you can handle larger monthly payments. They too are available for the Conventional, VA, Jumbo, and FHA loans. There are 40 year loans available for both the Jumbo and the Conventional loans. 40 year borrowers can expect to pay higher interest across the life of their loans.

Re-finance loans are highly popular. They help you increase the amount of monthly disposable income you have, but you should only take part in refinancing when you can get a lower interest rate on your mortgage. It is not a good idea to refinance very often because the closing costs and the points are collected at each transaction.

Fixed rate mortgages are when the interest rates remain fixed for the life of your loan. Adjustable rate mortgages are loans that have fluctuating interest rates. Variable rate mortgages are the kind that will fluctuate across the life of your loan.

Sub-prime loans are here to stay. They are still necessary in spite of the bad reputation they have received.

Balloon mortgages are short-term loans containing a bit of risk for borrowers. They can help you obtain a mortgage loan but should be financed into more reliable and more stable payment products when feasible. They are best if planning on staying in the home three years or less.

Fixed rate second mortgages are perfect for times when you need to make home improvements, have medical emergencies, or college tuition needs paid. You can only get a second mortgage after your first one has been applied to your property. The second mortgage is the loan attached to the equity you have in your home. You can expect a higher interest rate on your second mortgage.

There are other loan products you can look into like ‘Interest-only’ mortgages, and ‘Reverse’ mortgages, ‘poor credit’ mortgages, ‘bad credit’ mortgages, and ‘bad credit re-mortgages’. You can go online and find all these types of loans that are available today from many qualified lenders.

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