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Knowing the Various Types of Mortgages

There are different types of mortgages which are available today. It is actually on your advantage to know about every mortgage type prior to looking for the next property. A lot of people actually applies for fixed-rate mortgages. With a fixed rate mortgage, the interest rates actually stays the same for most of the term of the loan, which actually ranges from 10 – 30 years. An advantage with this kind of mortgage is that you will be able to know how much the mortgage payment is going to be and you will also be able to plan for it, though the property taxes and home owners insurance changes during the time of the repayment term of the mortgage.

A good advantage of ARM is where you could afford the more expensive homes because an initial interest rates are actually lower. You also could find several government mortgage programs to which includes the Veteran’s Administration’s program, Department of Agriculture program, Federal Housing Administration mortgages and also the conventional loans. It is important that you discuss your financial situation with the real estate broker on the different loan options before you start on shopping for a mortgage.

Below are some types of mortgages:

A conventional mortgage loan will need a minimum of 3% down payment. Private mortgage insurance or PMI is needed unless there will be a 20% down payment or if the lender has paid PMI will be offered by the mortgage firm. Mortgages are also offered for investors and the owner occupants.

There’s likewise the FHA financing where this needs a minimum of 3.50% down. The FHA likewise will allow approved nonprofit organizations and family members in assisting homebuyers with down payment requirements. An upfront and monthly mortgage insurance also is needed. It’s an owner occupied financing that’s being offered.

Another is the veterans administration where honorably discharged veterans or an active-duty personnel in the military who has met the qualifications are eligible for the no down payment mortgage financing. This kind of mortgage however will need an upfront funding fee unless the veteran is disabled. This actually doesn’t need monthly mortgage insurances, but is only made available for the owner occupants only.

The last one would be the USDA financing program where it’s made available through the United States Department of Agriculture. A loan type like this will allow zero down financing for owner-occupied properties at some of the designated rural areas.

Every one of such loan types will offer various features and you need to research well first in order to determine which of the loan type will fit with your financial situation.

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