Consumption and Real Estate
What types of mortgage loans are there? WHAT SHOULD I BE CAUTIOUS ABOUT WHEN GETTING THIS TYPE OF LOAN?
Question : What types of mortgage loans are there? WHAT SHOULD I BE CAUTIOUS ABOUT WHEN GETTING THIS TYPE OF LOAN?
-TRYING TO HELP MY PARENTS W/IT SO PLEASE HELP ME UNDERSTAND..
types of mortgage loans
Best answer:
Answer by Jack
Check it out here. It’s an excellent site with some wonderful options for you. It will definitely help you. Have a look.
http://loan-house.we.bs/homeloans.html
A great loan to get is a 30-year fixed rate mortgage with no prepayment penalty.
Fixed rate means that the major part of the monthly payment (the principal and interest) will never change. No prepayment penalty means that you can sell the house, pay back part of the loan early, or refinance at any time, with no “penalty” of having to pay an extra fee.
Having a fixed rate mortgage is great if interest rates go up in the future: You can save tens of thousands of dollars over a comparable adjustable rate mortgage. If you have a fixed rate loan and interest rates go down in the future, you can pay moderate costs (perhaps 1-2% of the loan amount) and usually refinance your fixed rate mortgage at a lower rate.
Be cautious about PMI (Private Mortgage Insurance). If possible, get a loan without PMI, but this is not always possible. On another note, sometimes you have to pay a small amount each month toward property taxes and fire insurance with your monthly mortgage.
Other than fixed rate mortgages, there are also adjustable rate mortgages, also called ARMs. I’m including in this adjustable category so-called “hybrid” mortgages like a “5-year fixed that converts to an adjustable.” Many people are realizing now that adjustable rate mortgages can be very dangerous – You can lose a lot of money if something goes wrong with house prices, the economy, interest rates, or your income or credit score. Be cautions about getting any type of adjustable mortgage, including “fixed” that turn adjustable.
In general, shop around for the best loan so that you can compare interest rates and “closing costs” (expenses that you pay when you get the loan). If someone is a “first time home buyer” (never owned a home) then there are many special programs that can help. It depends on where you live – Talk to real estate agents who want to work with you as a “buyers agent” and to banks who want to have you as a customer for a mortgage loan, to get ideas.
Be cautious of anything that seems “strange” like unusual deals, weird companies, or special programs that you don’t understand.