The Home Mortgage Types
There are quite a list of different mortgages that would be used to buy property or real estate. All the types are defined by their type, for example if it is an adjustable rate mortgage or fixed rate mortgage or there are subtypes to the home mortgages which define the amount of time they last before resetting. The above time can range from 5 years to 30 years and typically the newer mortgages are going to be fixed rate. If you want to know more about the mortgage loans, here is some more info.
There is a big difference between what you will pay for a home with a mortgage or without one, ARM's can change drastically because there is no set interest rate like traditional loans. So when the economy shifts, your monthly payment could go up in some cases double what it was, but in others it can drop. D
iscover about the mortgage compliance audits on this article.
So let's talk about the home mortgage types;
Fixed rate - You'll pay the same amount for this loan during its duration before it resets.
ARM - This is an adjustable rate mortgage which allows you to change with the economy.
Interest only - The interest on this type of loan will be paid back monthly, but the principal won't.
Conventional - These are typically subprime mortgages, but are not currently being offered by lenders. They allow for a larger loan amount than standard loans.
Jumbo - This type of mortgage is meant for either expensive properties or homes that exceed the limit of the conventional loan which is around $417,000 in most cases.
FHA insured - This type of loan is only available to lower income families, but it has a lower interest rate than other types.
VA insured - This type of loan offers special financing options if you are in the military.
USDA loans - These are for low-income rural property owners with low down payments and make for great investment properties.
All of these types of mortgages might sound sweet when you are borrowing, but when it comes time for you to pay them off they can get out of hand and cause financial hardships. For example if you take a loan and your interest rates go up well past the amount you could afford and now not only do you have a mortgage but you have a mortgage with back payments.
These mortgages are going to vary from state to state, loan provider to loan provider and even market to market so if you are considering purchasing then consult a financial planner before signing on the dotted line.
Interest only mortgages good or bad?
Interest only mortgages are a type of mortgage with a set interest rate that doesn't change. Interest-only mortgages can also be known as IO loans, and they're meant to be short-term loans rather than long-term mortgages. They allow flexibility for homeowners, but there's always the possibility of something going wrong if you don't properly budget for your mortgage payment.
People can get interest-only mortgages if they want to be able to make lower monthly payments, or for other reasons like trying to avoid PMI insurance . Generally, these mortgages are for people who have high earning potential in the coming years so that they can take advantage of this short-term flexibility while paying down the principal and interest on their loans.
Interest-only mortgages can be good for people who want to pay off their loan early and purchase a home before they reach retirement age . People who don't have enough cash at closing or those who are making major renovations on the property may also benefit from this type of mortgage as well as those with bad credit rating . You can read the following article to get more informed about the topic: https://www.huffpost.com/archive/ca/entry/mortgage-approval-tips-canada_ca_60099f45c5b62c0057c43681.