For most people, purchasing a home is nerve racking enough. The most difficult part is understanding what finance options are out there and which one best suits your needs.
Adjustable Rate Mortgages
With a conventional fixed-rate mortgage, the interest rate stays the same during the life of the loan. But with an Adjustable Rate Mortgage, the interest rate changes periodically, usually in relation to an index, and payments may go up or down accordingly. Lenders generally charge lower initial interest rates for Adjustable Rate Mortgages than for fixed-rate mortgages.
Bad Credit Mortgages
Just because your credit isn't perfect doesn't mean you should miss out on the opportunities available to everyone else. You can get relief from high mortgage and interest payments with bad credit mortgages, but you can also get much more.
Bi Weekly Mortgages
The bi-weekly mortgage shortens the loan term from 30 years to 18 to 19 years by requiring a payment for half the monthly amount every two weeks. While you pay about 8 percent more a year towards the loan's principal than you would with the 30-year, one-payment-per-month loan, you pay substantially less interest over the life of the loan. Keep in mind, however, that with shorter-term loans, you trade lower total costs for smaller mortgage interest deductions on your income tax.
Home Mortgage Loan
For most people, purchasing a home is nerve racking enough. The most difficult part is understanding what finance options are out there and which one best suits your needs. Remember, lending is a business and lenders are in the business of making money through loaning money and getting paid interest on this.
Negative Interest Mortgage Loan
The real purpose of negative amortization has been to reduce the mortgage payment at the beginning of the loan contract. It has been used for this purpose on both fixed-rate mortgages (FRMs) and adjustable rate mortgages (ARMs). A second purpose, applicable only to ARMs, has been to reduce the potential for payment shock, a very large increase in the mortgage payment associated with an increase in the Adjustable Rate Mortgage (ARM) interest rate.
Private Mortgage Insurance - PMI
In the event that you do not have a 20 percent down payment for your newly purchased home, lenders will allow a smaller down payment, as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on you loan's structure.
Refinance Home Mortgage
Refinancing your home mortgage is a way of replacing high-interest debt with a home loan that has a lower interest rate. But it can also be done in order to switch from a fixed rate mortgage to variable rate mortgage, or vice versa, or to eliminate a balloon loan payment. A cash-out refinancing is one that involves you paying off your home loan and borrowing an additional amount. The entire loan amount is secured by a mortgage lien on your home.
A Reverse Mortgage is a special type of home loan that lets a homeowner convert the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to the homeowner: in a lump sum, in a stream of payments, or as a supplement to Social Security or other retirement funds. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrowers no longer use the home as their principal residence.
There are many clear advantages to this type of creative financing. The most frequent use is a second mortgage that reduces the Loan to Value of the first loan in order to allow you to more easily qualify for the loan. An good example would be where the primary lender or first mortgage holder will only lend 70% LTV and you only have a 20% down payment. A second mortgage can be used to make up the difference.
Wrap Around Mortgages
Wrap-Around Mortgaging can be used for your Small Business Startup. Wrap Around Mortgages - usually means that there is an assumable loan on the property, say $30,000 at 6 percent, and that a seller or other party takes back a loan for the buyer, say, $100,000 at 8 percent. The $100,000 consists of the continued loan obligation to repay the old $30,000 debt and $70,000 in new debt. The seller or lender actually receives 2 percent interest on the first $30,000 and 8 percent on the remaining $70,000. Since the seller or lender did not provide the first $30,000, the rate of return for the $70,000 they did provide is substantially higher than 8 percent.
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Alternative Loans and Mortgages
- Fannie Mae Mortgages
Fannie Mae is a private, shareholder-owned company that works to make sure mortgage money is available for people in communities all across America. They do not lend money directly to home buyers. Instead, they work with lenders to make sure they don't run out of mortgage funds, so more people can achieve the dream of homeownership.
- FHA Loans - Mortgages
A mortgage on which the lender is insured against loss by the Federal Housing Administration, with the borrower paying the mortgage insurance premium. The major advantage of an FHA mortgage is that the required down payment is very low, but the maximum loan amount is also low.
- Freddie Mac
Freddie Mac is a stockholder-owned corporation chartered by Congress to increase the supply of funds that mortgage lenders, such as commercial banks, mortgage bankers, savings institutions and credit unions, can make available to homebuyers and multifamily investors.
- Ginnie Mae
Ginnie Mae is a slang term universally used to denote the Federally owned corporate entity that purchases, on the secondary market, residential real estate mortgages that were originated by local lenders. Ginnie Mae, or the association, then issues federally insured securities backed by the mortgages. The real abbreviation is GNMA, standing for the Government National Mortgage Association.
- VA Mortgages
A Veterans Administration (VA) Mortgage is a Mortgage with no down payment requirement, available only to ex-servicemen and women, on which the lender is insured against loss by the Veterans Administration.
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