A fixed-rate mortgage is a loan in which the monthly principal and interest payments remain the same throughout the life of the loan. The terms of the mortgage can be anywhere from 5 to 40 years. The most common mortgage terms are 30 and 15 years. With a 30-year fixed-rate mortgage your monthly payments are lower than they would be on a 15 year fixed rate, but the 15 year loan allows you to repay your loan twice as fast and save more than half the total interest costs.
An adjustable-rate mortgage differs from a fixed-rate mortgage in many ways. With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage, the interest rate changes periodically, by adding a margin to the borrower’s index, and payments may go up or down depending on the published index. The initial rate and payment amount on an adjustable-rate mortgage will be fixed for a limited period of time, ranging from just 1 month up to 10 years.
With an interest-only mortgage loan, the payment the borrower is required to make consists entirely of interest. This gives the borrower the flexibility of a lower monthly payment, but still allows for principal payments, if the borrower chooses to do so. The interest only term lasts for a specific amount of time, generally 5 or 10 years. At the end of that term the borrower either refinances, pays the balance in a lump sum, or begins to pay toward the principal. When the borrower begins to pay the fully amortized payment, the payment is spread out over the remaining term of the loan, which can cause the payment to increase significantly. The interest-only feature is generally available only with Adjustable Rate Mortgages.
An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). The Federal Government insures loans for FHA-approved lenders to protect against loss should a borrower default on their mortgage payments. Typically, an FHA loan is one of the easiest types of loans to acquire, as they require only a small down payment and accept less-than-perfect credit. The income and credit requirements are not as stringent as they are on Conventional loans. The typical FHA borrower makes a down payment of 3.5% instead of the traditional 20% down payment.
A VA loan is a mortgage loan that is guaranteed by the U.S. Department of Veteran Affairs (VA). VA loans were designed to offer financing for eligible American Veterans and their surviving spouses. VA loans typically require no down payment and in some “high-cost” areas, VA loans offer much higher loan limits than Conventional or FHA mortgages, up to $4 million. Like FHA mortgage loans, VA loans are more lenient when it comes to income and credit qualifying.
If you are 62 or older and want to convert your equity into cash while continuing to live in your home, a Reverse Mortgage may be the solution. A Reverse Mortgage could help you pay off your existing mortgage or other debts, finish your home renovations, fund your dream vacation, assist you in paying for in-home care or other healthcare expenses, and even provide a living inheritance for your family. Even if you've been turned down for a Reverse Mortgage in the past, you may be eligible now.
A non-QM loan, or non-qualified mortgage, is another alternative if your situation doesn’t fall into the traditional mortgage category. These loans do not meet the same lending guidelines that agency loans do and are meant to help the consumer if their financial situation is not conventional. Some examples of non-QM loans are using bank statement income to qualify or no income investment loans, which use the income the investment property will generate to determine the borrower’s ability to repay.
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