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Types Mortgage Home Loans

Types Mortgage Home Loans - Here are some examples of types of mortgages:

Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.

ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.

Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.

If you have a hybrid ARM or an ARM and the payments will increase and you have trouble making the increased payments find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan.

If you’re planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you’re planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.

Home Buying Tips

  1. Buying a home can mean building significant value through the years.
  2. Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
  3. Prequalifying with your lender is a good way to determine how much house you can afford.
  4. You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
  5. In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
  6. Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
  7. Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
  8. Remember to consider resalability when buying your home.