Choosing from the different types of mortgages in the US
Now that you've decided to live the great American dream and planning to buy your own property, you'd be surprised at the different decisions that you'll have to make. Where do I buy the property? What are the different options available, and which is the best of all? Choosing from the different mortgages can be an overwhelming decision for the most discerning buyer. Here's a list of the different mortgages along with the advantage of choosing them.
Fixed Rate Mortgage is by far the most popular type of mortgage. Under this type the borrower can pay the same interest rate, throughout the loan period. It's not only the interest rate, but also the monthly EMI that remains the same. The interest rate and the monthly EMI is likely to change only with an increase in the taxes, or insurance.
These loans range anywhere from about 10 to 30 year period, with the general principle being, that longer the loan term, higher is the interest that you are likely to pay. The only advantage of these loans is that the monthly burden on your budget is much lower than other types of mortgages and hence ideal for people planning to live in their homes for a very long time.
When the mortgage rate adjusts with the changes in the current financial index these loans are called Adjustable Rate Mortgage. As the name suggests the monthly EMI may increase or decrease, depending upon the market indices. While these mortgages bring with them the flexibility to pay low mortgage rates, they also bring along with them the risk of your payments increase radically if the market isn't favorable.
You can choose from an annual adjustable rate mortgage or from a 10/1 year adjustable rate mortgage. Under the annual adjustable rate, the interest rate will adjust annually and under the 10/1 year adjustable rate mortgage, the interest rate will remain the same for a decade and will adjust itself in the 11th year, according to the market index. Similar to the 10/1 year mortgage is the 7/1 year adjustable mortgage plan.
And if you are looking for government backed loans, you can choose from an FHA Loan, USDA Loan or a VA Loan.
People with low or moderate income groups are encouraged to buy their own property under the FHA Loan and are used for buying single and multiple dwelling homes.
People looking to buy homes in rural areas can benefit from loans supported by the US Department of Agriculture. First time home buyers, looking to buy property in a rural area, need not pay down payment or mortgage insurance under the USDA Loan plan.
If you've served, or are currently serving the United States military, you can benefit from the VA Loans backed by the government. The best thing about this loan is that you have to pay a small (and sometimes no) down payment if you can prove that you can afford to pay the monthly payments.
These are just some of the different loan types. Make sure you speak to a financial consult before you commit yourself to a mortgage plan.
Fixed Rate Mortgage is by far the most popular type of mortgage. Under this type the borrower can pay the same interest rate, throughout the loan period. It's not only the interest rate, but also the monthly EMI that remains the same. The interest rate and the monthly EMI is likely to change only with an increase in the taxes, or insurance.
These loans range anywhere from about 10 to 30 year period, with the general principle being, that longer the loan term, higher is the interest that you are likely to pay. The only advantage of these loans is that the monthly burden on your budget is much lower than other types of mortgages and hence ideal for people planning to live in their homes for a very long time.
When the mortgage rate adjusts with the changes in the current financial index these loans are called Adjustable Rate Mortgage. As the name suggests the monthly EMI may increase or decrease, depending upon the market indices. While these mortgages bring with them the flexibility to pay low mortgage rates, they also bring along with them the risk of your payments increase radically if the market isn't favorable.
You can choose from an annual adjustable rate mortgage or from a 10/1 year adjustable rate mortgage. Under the annual adjustable rate, the interest rate will adjust annually and under the 10/1 year adjustable rate mortgage, the interest rate will remain the same for a decade and will adjust itself in the 11th year, according to the market index. Similar to the 10/1 year mortgage is the 7/1 year adjustable mortgage plan.
And if you are looking for government backed loans, you can choose from an FHA Loan, USDA Loan or a VA Loan.
People with low or moderate income groups are encouraged to buy their own property under the FHA Loan and are used for buying single and multiple dwelling homes.
People looking to buy homes in rural areas can benefit from loans supported by the US Department of Agriculture. First time home buyers, looking to buy property in a rural area, need not pay down payment or mortgage insurance under the USDA Loan plan.
If you've served, or are currently serving the United States military, you can benefit from the VA Loans backed by the government. The best thing about this loan is that you have to pay a small (and sometimes no) down payment if you can prove that you can afford to pay the monthly payments.
These are just some of the different loan types. Make sure you speak to a financial consult before you commit yourself to a mortgage plan.
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