Friday, July 10, 2015

Home Loan Types

Buying or loaning your dream house is the biggest decision the majority of us will ever make, and we all know that obtaining a mortgage to purchase a new home could be a difficult process. But don’t worry, Vahe Hayrapetian is here to help as he outlines some of the most common home loan options and how they can serve individual applicants:

Fixed-Rate Mortgage

If you’re looking for a financing with consistent interest rate that will stay the same throughout the life of the loan, then the fixed-rate mortgage is the one for you. Fixed-rate mortgages are most appropriate for those seeking for a long-term financing approach. However, you must know that fixed-rate plans often are considerably higher mortgages than what an adjustable rate would offer.

Adjustable Rate Mortgage

Adjustable rate mortgages (ARMs) refer to home loans that offer interest rates that are dependent on the existing market conditions. Taking the ARMs road could be a little risky, especially for those looking forward to residing in their home for a long period of time, as no consumer can predict the market conditions that will develop throughout the life of the loan. However, ARMs provide a decent option for those looking to purchase a starter home that they may not live in for the entire duration of the mortgage. ARMs also provide an initial interest rate that is lower than what one would experience with a fixed-rate mortgage.

Hybrid Home Loans

Hybrid financing is becoming a very popular option in today’s recovering housing market. The good thing about hybrid financing is that it allows the homeowner to become financially established first by starting off with a fixed-rate that will remain for a pre-determined period. These initial periods can typically last for one, three, five or seven years, depending on the lender. After this period has expired, the loan will transition to an adjustable rate, in which current market conditions will impact the required monthly payment.

These are only the most common approaches to obtaining a mortgage. Vahe Hayrapetian is urging eligible applicants to consider other type of government-backed home loans, like the ones backed by the Federal Housing Administration. For this reason, Vahe Hayrapetian encourages borrowers who face severe credit problems to first determine if they are eligible for an FHA home loan.

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