It may be surprising for some to learn just how many types of mortgages there are to choose from when purchasing a home. Regardless of a person’s financial or demographic situation, working with a Top Mortgage Lender like Sun West Mortgage will help borrowers determine their needs in order to secure the mortgage that will help them purchase or maintain their dream home.
Most often, a purchaser will want to take advantage of either a fixed or adjustable mortgage to buy their home. Fixed mortgages are ideal for those who want their principal and interest payments to stay the same each month for the length of the loan. This makes long-term financial planning easier since you can count on your mortgage to stay roughly the same. These loans are usually either 15- or 30-year mortgages. Adjustable mortgages are not locked into a specific interest rate, so payments can fluctuate over the years. Rates are generally lower for the first few years of the mortgage, so this is a good option for those who move often, plan to use their property for rental income, or are investors in need of short-term capital.
Mortgages for Specific Demographics
Depending on military or financial status, purchasers may qualify for loans specifically catered to their personal situation. An FHA loan is a popular option for first time home buyers because the rules are less strict for minimum credit score and down payment requirements. This makes home ownership more attainable for those who can afford the mortgage payments but do not have a sizeable lump sum for a down payment. A USDA loan is similar in that no down payment is required, so it caters to first time buyers or those with a lower income. Homes purchased through this type of mortgage must be located in a rural area. VA loans are ideal for active military or retired veterans since there is no down payment or mortgage insurance required, and credit score requirements are lower than other options.
Refinance Loans and Options
Homeowners at times may need to refinance their homes to help during difficult financial situations. In these instances, a HARP or reverse mortgage may be the answer. A reverse mortgage is geared towards older homeowners and allows them to borrow against their mortgage without having to pay the loan back until they move or pass away, at which time the estate repays the loan. The HARP program allows homeowners to refinance their homes even if the value of the property has fallen below the loan balance due to the economic housing downturn.