The vast majority of individuals buying real estate will have to do so using a mortgage. For most people, a mortgage will be the largest loan that they ever take on, and it's important to understand all facets of a mortgage long before you sign your name on the dotted line. A mortgage is a serious business partnership between you and your chosen lending institution to finance the home while you pay the outstanding funds back. Mortgages come in all different shapes, sizes and interest rates, so make sure you're informed of all of the different types before you sit down to negotiate with your lending institution to buy your real estate.
The first type of mortgage and arguably the most popular and traditional is a Fixed Rate Mortgage. Fixed rate mortgages charge you a certain percentage of interest over an extended period of time in exchange for putting up the funds to purchase the property. Available in different terms such as ten year, fifteen year, twenty year and so on, fixed rate mortgages are a good choice for those individuals who expect to stay in their property for an extended period of time and prefer the stability of a traditional mortgage.
Interest
Only Mortgages are exactly how they sound. Rather than paying for both the principal and the interest incurred on the mortgage, homeowners only pay the interest on the loan. This effectively means the loan is never fully paid off, it can be a valuable tool for those buying a property as an investment, or a property that they plan on selling fairly soon after the purchase.
ARM Mortgages are Adjustable Rate Mortgages. This means that the interest rate for the mortgage can fluctuate each year with the changing economy and the interest rate index. This means sometimes the interest rate and therefore payment could be much lower than others, but beware of those times that the interest rate goes higher. This means you will be responsible for paying the loan back at whatever the current interest rate is, whether that is 6% or 15%.
VA Home Loans are loans available only to veterans that qualify against specific circumstances. A VA home loan often has a low, fixed interest rate and are backed and protected by the U.S. Government. However only those that meet some special criteria qualify for these loans. Some of these special qualifications include veteran status, widows or widowers of veterans, discharge status, etc.
The first type of mortgage and arguably the most popular and traditional is a Fixed Rate Mortgage. Fixed rate mortgages charge you a certain percentage of interest over an extended period of time in exchange for putting up the funds to purchase the property. Available in different terms such as ten year, fifteen year, twenty year and so on, fixed rate mortgages are a good choice for those individuals who expect to stay in their property for an extended period of time and prefer the stability of a traditional mortgage.
Interest
ARM Mortgages are Adjustable Rate Mortgages. This means that the interest rate for the mortgage can fluctuate each year with the changing economy and the interest rate index. This means sometimes the interest rate and therefore payment could be much lower than others, but beware of those times that the interest rate goes higher. This means you will be responsible for paying the loan back at whatever the current interest rate is, whether that is 6% or 15%.
VA Home Loans are loans available only to veterans that qualify against specific circumstances. A VA home loan often has a low, fixed interest rate and are backed and protected by the U.S. Government. However only those that meet some special criteria qualify for these loans. Some of these special qualifications include veteran status, widows or widowers of veterans, discharge status, etc.
Art Gib
Low VA Rates (http://www.lowvarates.com) offers great VA home loans and mortgages. If you are looking for a VA home loan, to refinance, or a home mortgage then look to us for your needs. Art Gib is a freelance writer.
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