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Six Mortgage Types For Home Buyers: Which Is Best For You?

understanding-mortgagesFrom the outside, real estate looks somewhat like a game, with players like Donald Trump throwing weight and cash around, accumulating all kinds of lucrative properties. For the rest of us, buying a home is actually an intimidating process. If you are looking for houses for sale Charleston SC,  Premier one has the experience to make the process less intimidating.

Here are six types of mortgages and how they may work for you as a borrower, in simple and realistic terms.

1. The Fixed Rate

The terms of a fixed rate mortgage are relatively self-explanatory; your interest rate will remain constant throughout the life of the loan. If you can negotiate a reasonable rate, payments should be easily digestible, and you have the benefit of never being surprised by market fluctuations. However, should rates tank, you’ll be green with envy with what other people are then paying.

2. An Adjustable

While the adjustable rate loan frequently offers lower initial terms, over the years you may see significantly higher interest, according to the rise and fall of interest rates in the open market. An adjustable is somewhat of a gamble, but most lenders will make it worth your while in the beginning, setting you up with something you can afford, along with fairly reasonable expectations for the future. When interest rates fall, you’ll be very satisfied with this type of loan.

3. Interest Only

Although an interest only loan may sound simple enough, since the terms change over time, you really need to investigate every aspect of this type of arrangements. Generally, you are responsible for paying just the interest for an agreed upon period of months, then you’ll be expected to pay the entire loan in full, at much higher rates or perhaps to refinance the money completely. Finagle this one carefully and according to your ability to repay, and it might be very convenient for you.

4. Reverse Mortgage

Reverse mortgages have unfortunately received bad press on occasion, but understand that such reporting is due to a few lenders behind the story. A Federally insured reverse mortgage obtained under the right circumstances means as senior, your home becomes a fountain of equity which you don’t repay provided you remain in the home. If you sell, pass away or decide on some other place as a primary residence, you become obligated to the repayment terms immediately.

5. A Home Loan For Veterans

Veterans rightly deserve a break when it comes to buying a home, and if you served in the United States Armed Services, are currently active duty or the surviving spouse of a service person, consider a home loan for veterans. Terms are generally quite agreeable, however, the amount you may be eligible to finance could be limited. Talk to a mortgage lender to find out what your best options are if you can’t obtain full financing as a veteran.

6. Federal Assistance Mortgages

The Federal Housing Administration may have what you’re looking for in a home mortgage, provided you aren’t trying to buy a mansion. Most people find relief from hefty down payments with an FHA deal, because their terms are more lenient than those offered on the open markets. Good credit is still required, though, and while you’re not held to any minimum income requirements, your debt-to-income ratio is strongly considered during the qualification process. Note also that the FHA offers different types of mortgages itself, with the fixed rate being the most popular among first time home buyers. For more on the different type of government loan programs:

When a mortgage is broken down into language we can all understand, parting with more than a hundred or so thousand dollars for a few decades isn’t so intimidating. Find a good mortgage lender who makes you feel at ease, and discuss the possibilities. The home of your dreams may be a lot closer than you think.

Understanding The Trends In Mortgage Rates

Anyone who has ever bought a house knows how important the mortgage rate can be in guiding their decision making. High interest rates can dissuade people from deciding to buy, and when rates fall, many people rush into the market. If you are looking at homes in the Charleston area, it is therefore important for you to pay attention to the trends in mortgage rates.

When looking for Charleston SC real estate, there are, of course, three basic ways rates can behave. They can go up, they can go down, or they can stay the same. Obviously this may seem simple, but this apparent simplicity can mask a great deal of complexity that you need to account for in your decision making. Ignoring this complexity can end up costing you a lot more than you need to spend.

For example, you might think that when rates are going up, this is a time to avoid buying a house. However, what you need to remember is that many other people will be feeling the same way. Fewer people will be interested in purchasing a home, which means that demand will drop.

As demand drops, basic economics tells you that prices will also fall. In such a case, this may actually be a good time to start looking for a home, even though interest rates are higher than they used to be. The savings from the reduction in price may actually offset the additional interest that you will have to pay due to the rise in rates.

Conversely, just because interest rates are falling does not mean that you should rush out and start looking for a house to buy. As interest rates fall, more buyers enter the market, which means that demand goes up. Increasing demand means that there is now a seller’s market, which means that prices will rise.

The savings from the lower interest rates may not offset the increased prices that you will have to pay. Just as rising interest rates may actually be a sign that it is time to buy, falling interest rates can indicate that you should be hesitant about leaping into the market.

When interest rates are flat, on the other hand, you will have to take other factors into consideration. If rates are generally stable, this means that the decision to buy will be governed by other factors, such as the general supply of homes. Whether or not it is a good time to look for a house will depend upon these factors, as well as on your personal financial situation.

While interest rates are important in the home buying process, they are not the only factor that you need to take into consideration. It is never a good idea to base your decision solely on interest rates. They can play a major role, but they should not be your sole consideration.

When you are looking for a home in the Charleston area, pay attention to the mortgage rates. Keep an eye out for the best rate so that you can save as much money as possible on the deal.