Types of Home Loans
When it comes to finding a way to pay for the house you are interested in purchasing, the best option is paying through long-term mortgages. Although mortgages involve an additional interest rate payment, they are convenient and would save you from facing any excessive financial burden.
Loan and mortgage policies differ regarding payment periods, fixed or unfixed rates, a number of monthly installments etc. Each policy suits certain types of customers as they are based on varying financial need and requirements.
Choosing a suitable home loan can be quite complicated and is a big decision to make. One must make sure that the policy they choose suits his needs and financial sources. While a good loan policy can prove to be a financial miracle, choosing the wrong one can make you face a financial disaster.
Listed below are some common types of home loans and their characteristic which would help guide you while choosing one:
Fixed Thirty Year Mortgages
Such mortgages have a repayment period which is up to thirty years and have fixed installments. Although such loans cost more than adjustable loans, a number of individual installments are stable and do not vary as interest rates vary. Thus, if your income source is large enough to pay for such a mortgage, this is a great option available.
Fixed Fifteen Year Mortgages
These mortgages have a fifteen-year repayment period. Thus, the individual installments are bigger as the loan is to be repaid within a smaller period. Although you will be able to build home equity quickly, make sure your resources are big enough to pay such high installments.
Adjustable Rate Mortgages
Such mortgages depend upon changing interest rates and market trends. The monthly installments change as the interest rates change. ARMs include many sub-policies; each has different installment change terms. These loans are beneficial for those who are planning to flip the house they are buying within a short period because these loans provide low-interest rates and monthly payments and you wouldn’t have to experience installment changes. However, in the case of a long-term investment, due to constantly varying installments, you might have to face financial instability while paying the installments on the home
Interest Only Mortgages
Interest-only mortgages can be either fixed or adjustable. In such mortgages policies, the customer is required only to pay the interest for a period of time of time. After that time ends, the remaining mortgage amount is repaid by the client in proper monthly installments, including interest. These mortgages are suitable for individuals who expect a better personal financial condition in the near future and thus, would be able to pay complete installments.
Flex Pay Mortgages
In such mortgages, the customer can pay different monthly installments each month; either interest only or low-interest installments. These mortgages are suitable for those who have unsteady incomes and cannot pay the same monthly installments each month. However, continuously paying low interest installments, it would increase debt and one might face financial problems. California55Plus Real Estate can assist anyone looking for a home loan that fits their situation.