For most of us, owning a home is an essential part of what we call the American Dream! However, for many, this requires, depending on obtaining a mortgage loan, to be able to pay for this purchase. After more than 15 years as a licensed real estate seller in New York State, I often take the opportunity to discuss with potential clients/buyers some of the options early in this process. Basically, there are at least four types of mortgages often available, depending on need, qualifications, finances, comfort zone, etc. of an individual. With that in mind, this article will briefly attempt to consider, examine, review, and discuss these and explain their differences, as well as some of their possible advantages and disadvantages.
1. Balloon: Sometimes, one’s personal circumstances dictate, considering a balloon loan. This type of loan is usually for a relatively shorter period (often 5-7 years), requires very little down payment (other than fees, etc.) down payment. However, at the end of the term, the borrower must refinance, pay off the balance, or sell the home. You probably recognize, therefore, both the (short-term) benefits, as well as the possible longer-term ramifications/considerations.
two. Adjustable: Many homeowners take advantage of an adjustable term mortgage for a variety of reasons. Often the interest rate, etc., is lower and therefore more affordable than for a more conventional type of loan. Because of this, some may qualify, because many loans are based on total monthly payments. However, it should be recognized that these terms and rates change from time to time at regularly scheduled intervals and, depending on the underlying general interest costs, may increase, at times, by a significant amount. !
3. 15 – Conventional Year: A Conventional Mortgage is one that has the same monthly payments for the term of the loan. The only thing that changes is the allowances paid, in escrow, for items such as property taxes, insurance, etc.! In general, the shorter the term, the lower the rate paid, but this also creates, since the repayment term is shorter, a higher fee!
Four. 30 – Conventional Year: Conventional mortgages are generally available in a variety of time periods, but the 30-year type is generally the most in demand. Like almost all mortgages, they no longer have prepayment – penalties, those that seek to return, in a shorter term, increase their monthly payment, but have the flexibility to pay the regular amount, when it makes the most sense, for them. Obviously, since the principal is repaid over a longer period, monthly payments are reduced, but lenders often charge slightly lower rates for shorter-term loans.
I will always tell you what you need to know, not just what you want to hear. (MT). This trademark, which I am proud to lead, directs my professional conversations/interactions, to ensure that my clients are well informed and informed!
