Austin Texas: Buyers have choices for loans. There are many types of loans but here are a few that are popular in the real estate industry.
While the choices may seem overwhelming the goal is really simple. You need to find a loan that works with current financial situation and your future goals. This article discusses common loan types you should talk about with lenders to decide the right loan for you.
Categories
Loans fall into 3 categories: adjustable rate, fixed rate and hybrid loans with a combo of both.
Loans fall into 3 categories: adjustable rate, fixed rate and hybrid loans with a combo of both.
Adjustable mortgages differ from fixed mortgages since rates and monthly payment can change. Since the rate for an adjustable is connected to the Treasury Securities that fall or rise over time. Adjustables usually have caps or limits so the rate does not rise above a certain adjustment With low introductory rates adjustables are the most accepted alternative to fixed rate mortgages.
Fixed rates carry the same rate for the complete. These mortgages have been popular among buyers, because the fixed payment is to budget. Fixed rates are common in 30yr and 15yr terms but lenders have offered 20yr and 40yr loans.
Hybrids combine features adjustable and fixed. Hybrids start with a fixed rate for a length of time and later change to an adjustable. Some hybrids do not have rate caps for the first period.
Balloon Payment
Balloon payment is a loan with a large final payment at the completion of the loan - ie after 7 years of payments the remaining balance is paid off.
Balloon payment is a loan with a large final payment at the completion of the loan - ie after 7 years of payments the remaining balance is paid off.
Time
If you stay in a home for 10 years or more a traditional fixed rate will be your best choice. If you own a home for 5 years or less then the adjustable will make the best financial sense.
If you stay in a home for 10 years or more a traditional fixed rate will be your best choice. If you own a home for 5 years or less then the adjustable will make the best financial sense.
Conventional Loan
A conventional loan is offered by a private lender. Conventional loans are harder to qualify for than government loans, they have less paperwork and do not have a maximum amount.
A conventional loan is offered by a private lender. Conventional loans are harder to qualify for than government loans, they have less paperwork and do not have a maximum amount.
VA and FHA
Government loans like FHA and VA are designed for home ownership for people who may not be able to qualify for a conventional. FHA and VA loans have lower ratios than conventional loans and require smaller down payments.
Government loans like FHA and VA are designed for home ownership for people who may not be able to qualify for a conventional. FHA and VA loans have lower ratios than conventional loans and require smaller down payments.
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