In the current housing market, mortgage interest rates are at historic levels. As banks offer attractive lending packages, more and more people are seeking new home financing. People who are new to the real estate market may be perplexed by the various options that are available to them. Finding out about the available types of home mortgages can help these individuals find a suitable loan.
There are several types of mortgages. First time home buyers tend to favor fixed-rate financing, since these arrangements offer a set payment amount each month. While these loans tend to have higher interest rates than some of the other plans, purchasers may appreciate the ability to know exactly what their payment will be each month.
Another home loan option is called an adjustable-rate mortgage. These plans are advantageous in times when the housing market is slow, since the lending rates are low during these periods, which makes the monthly payment more affordable. When the economic outlook improves, however, the monthly payment can increase drastically. Prospective home buyers may want to consider this type of loan for a starter home or a property they don't plan to live in for many years.
Interest-only loans allow real estate shoppers to pay a very low amount on their home loan during an initial period. Since the loan holders are only paying toward the interest on their home and not the principal, the amount of their monthly payment can double or even triple after the initial loan period ends. These financing plans are best for home buyers who have steady income that will help them meet the higher payments.
Individuals who already own a home may be considering refinancing their home loan to take advantage of the low interest rates that are being offered. A general rule is that if the market rate is at least a full percentage point lower than the contracted rate in a current home mortgage, it may be a good idea to refinance. Many financial institutions offer competitive refinancing rates, especially for home owners who have substantial equity in their property.
Other property owners might be interested in a home equity loan to help with home improvement costs. These loans are also referred to as "second mortgages", because they are a second loan that is taken out on the amount of value that a homeowner has already paid toward his property. Home equity loans can also be packaged as fixed-rate, adjustable-rate, or interest-only financing plans.
There are several types of mortgages. First time home buyers tend to favor fixed-rate financing, since these arrangements offer a set payment amount each month. While these loans tend to have higher interest rates than some of the other plans, purchasers may appreciate the ability to know exactly what their payment will be each month.
Another home loan option is called an adjustable-rate mortgage. These plans are advantageous in times when the housing market is slow, since the lending rates are low during these periods, which makes the monthly payment more affordable. When the economic outlook improves, however, the monthly payment can increase drastically. Prospective home buyers may want to consider this type of loan for a starter home or a property they don't plan to live in for many years.
Interest-only loans allow real estate shoppers to pay a very low amount on their home loan during an initial period. Since the loan holders are only paying toward the interest on their home and not the principal, the amount of their monthly payment can double or even triple after the initial loan period ends. These financing plans are best for home buyers who have steady income that will help them meet the higher payments.
Individuals who already own a home may be considering refinancing their home loan to take advantage of the low interest rates that are being offered. A general rule is that if the market rate is at least a full percentage point lower than the contracted rate in a current home mortgage, it may be a good idea to refinance. Many financial institutions offer competitive refinancing rates, especially for home owners who have substantial equity in their property.
Other property owners might be interested in a home equity loan to help with home improvement costs. These loans are also referred to as "second mortgages", because they are a second loan that is taken out on the amount of value that a homeowner has already paid toward his property. Home equity loans can also be packaged as fixed-rate, adjustable-rate, or interest-only financing plans.
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