There isn't a one simple, correct answer to which loan program is "right" for you. The right type of loan for you depends on many personal factors:
I strongly encourage you to meet with a licensed, mortgage broker to analyze your situation and determine your best financing option. Below are just a few of the loan programs available.
Fixed Rate Mortgages
Fixed rate loans provide you with an interest rate and payment that will not change over the life of the loan. Typically, the term of the loan is 10, 15, 20 or 30 years.
Reasons to select this option:
- You know exactly what your mortgage payment will be for the life of the loan
- You plan on staying in the home for 10+ years
- You are retired or on a fixed income
- Interest rates are low
Balloon Mortgages
Balloon loans are short term mortgages that have some features of a fixed rate mortgage, but still have a remaining principal loan balance at the end of the term. The lender generally requires that this type of loan be paid in full, which can be accomplished by refinancing.
Reasons to select this option:
- High interest rates and housing prices
- You plan to keep the home only for a short time
- You are a first-time home buyer
- You need to qualify for a higher loan amount
Adjustable Rate Mortgage (ARM)
An adjustable rate mortgage usually carries an interest rate that is 1 to 3 percent lower than a fixed rate loan. At the beginning of the term, the rate is fixed for a certain periods of time. These periods are usually 1, 3, 5, 7 or 10 years in length.
Reasons to select this option:
- High interest rates and housing prices
- You plan to keep the home only for a short time
- You are a first-time home buyer
- You need to qualify for a higher loan amount
Bi-weekly Mortgage
Mortgage payments are made every two weeks. The amount paid is half of what your monthly mortgage payment would be. However, you will be making 26 bi-weekly mortgage payments instead of 12 monthly payments.
Reasons to select this option:
- You pay down your principal mortgage earlier
- You save significant amounts of money in mortgage interest
- You pay off your home mortgage years earlier
Interest Only Loans
An interest only home mortgage features no payments of principal made at the beginning of the home loan. The monthly payments consist only of mortgage interest only.
Reasons to select this option:
- Initial lower mortgage payments
- You need to qualify for a higher loan amount
- You have extra money to seek a higher rate of return on an investment elsewhere
- Your household income will increase in the future
Stated Income Loans
A stated income loan is designed for persons who have a hard time documenting their income. With this type of a loan, income documentation such as W2s, pay stubs, or tax returns are not required.
Reasons to select this option:
- You are self-employed
- You are retired
- You cannot verify income
Federal Housing Authority (FHA) Mortgage
A FHA mortgage is a residential loan insured by the FHA that is part of the U.S. Department of Housing and Urban Development (HUD)
Reasons to select this option:
- Lower down payment
- Easier to qualify
- Assumable loan
Financing real estate property can be intimidating. That's why having a professional real estate agent represent can greatly reduce the amount of pressure you feel during this stressful time. Please email me or call me directly at 773-392-4252 or 847-337-4252 to discuss any of these matters in further detail.
