Types of Mortgages
A fixed term (for example, 15
or 30 years) as well as a fixed interest rate. The interest rate and term are fixed at the start of the
mortgage. The monthly amount
for the payment of principal and interest will not change during the term
of the mortgage.
Often referred to as an ARM. The
interest rate on the mortgage will be adjusted up or down according to current
interest rate levels. The monthly
amount for the principal and interest payment will go up or down with these rate
changes. These mortgages may include "Interest Only" type of loans.
are the 2 most popular types of mortgages used today. There are easily 10 times this number of financing types –
not to mention the hundreds of various configurations of rates and point options
that are offered..
Typically Consists of –
The repayment of the original amount borrowed on a monthly basis.
Interest: The cost of borrowing the
principal amount, repaid on a monthly basis.
Taxes: Real Estate taxes paid to a
local government agency.
Insurance: Homeowners insurance on
the home. Also any mortgage insurance, which is paid to protect the mortgage
The total of these items is known as the PITI (Principal/Interest/Taxes/Insurance)
How much down payment do I need?
One of the first questions that home buyers ask is "how
much down payment are we going to need”?
Unfortunately, there is no standard answer. Down
payments will vary from 0% (with a VA--Veteran's Administration loan) to
upwards of 25% (with certain "non-conforming" loans).
As an average, most home buyers make down payments in the 5%-15%
range, although your own personal situation may dictate more or less down
payment. When you are
factoring money for a down payment, don't forget about closing costs,
which will total in the 3-5% range, payable in cash at the time of
All financing is customizable.
It is necessary to fit the buyer’s specific needs and financial ability
into the loan program that best suits it. There
are 100’s of loan programs out there right now.
The most efficient way to find out what
programs are available and which
is the right choice for you is to schedule a consultation with your REALTOR or a
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