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: http://www.usa.gov/shopping/realestate/mortgages/mortgages.shtml#Shop_for_a_Loan

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.