When it comes to offering loans to potential homeowners, mortgage companies have a variety of options. Interest rates and terms vary according to the type of loan and each has its own unique set of requirements for approval. Consumers should research all the various types to have a clear idea of which loan is the best for them.
A fixed rate loan offers terms with a consistent interest rate for the life of the loan. The borrower pays equal monthly payments for the entire term with interest payments front-loaded. This means that over the first few years, a smaller portion of the monthly payment is applied toward the principal. Homeowners have an easy time budgeting for this type of loan but if interest rates fall, they are stuck with the higher rate.
An adjustable rate loan allows consumers to take advantage of interest rate fluctuations. The rate on the loan will adjust regularly throughout the entire term but a cap is set on how much it can change. Lenders typically offer lower rates to start with than on a fixed rate agreement. The downside is payments will increase as interest rates rise.
Loans offered by the Federal Housing Administration are specifically for buyers who cannot qualify for other types of loans. They offer a low down payment and low closing costs. At the same time, the criteria for qualifying are easier to meet. This is a great option for first time home buyers but loan amounts are typically limited.
VA loans are similar to FHA loans with restrictions on how much the consumer can borrow. These loans are guaranteed for active duty military personnel, surviving spouses, and veterans. The lender offers low interest rates and small down payments.
Additional options include balloon mortgages, reverse mortgages, and interest only loans. Experts working for mortgage companies can offer more information about loans and the various criteria and terms. Consumers can speak to these professionals about their options and decide what type of mortgage best suits their individual needs.
A fixed rate loan offers terms with a consistent interest rate for the life of the loan. The borrower pays equal monthly payments for the entire term with interest payments front-loaded. This means that over the first few years, a smaller portion of the monthly payment is applied toward the principal. Homeowners have an easy time budgeting for this type of loan but if interest rates fall, they are stuck with the higher rate.
An adjustable rate loan allows consumers to take advantage of interest rate fluctuations. The rate on the loan will adjust regularly throughout the entire term but a cap is set on how much it can change. Lenders typically offer lower rates to start with than on a fixed rate agreement. The downside is payments will increase as interest rates rise.
Loans offered by the Federal Housing Administration are specifically for buyers who cannot qualify for other types of loans. They offer a low down payment and low closing costs. At the same time, the criteria for qualifying are easier to meet. This is a great option for first time home buyers but loan amounts are typically limited.
VA loans are similar to FHA loans with restrictions on how much the consumer can borrow. These loans are guaranteed for active duty military personnel, surviving spouses, and veterans. The lender offers low interest rates and small down payments.
Additional options include balloon mortgages, reverse mortgages, and interest only loans. Experts working for mortgage companies can offer more information about loans and the various criteria and terms. Consumers can speak to these professionals about their options and decide what type of mortgage best suits their individual needs.
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Looking to find the best Mortgage Companies, then visit Swan Financial to find a Loan Program that's best for you.
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