Are you getting ready to apply for a mortgage? There are a lot of different types of home loans that are available to suit the individual needs of various homeowners. Some of the more common and different types of mortgages included:
Fixed-rate mortgages are one of the most common types of mortgages, mostly because of their set interest rate. A fixed-rate mortgage is amortized over the duration of the loan; in other words, the amount you owe is split into equal monthly payments. Fixed-rate mortgages usually last for a 30-year duration, but 15-year and 20-year fixed-rate mortgages are also common. Some banks are now even offering 40 and 50-year fixed-rate mortgages.
Balloon mortgages, which are designed similarly to fixed-rate mortgages, last for a much shorter duration. Balloon mortgages normally consist of smaller monthly payments that build up to a much larger payment at the end of the loan term, which is known as the balloon payment. If you know you will have the money for the balloon payment once the time comes, and you are unable to afford a standard mortgage payment structure in the meantime, a balloon mortgage may be the way to go. But if you know there is a slight chance of being unable to pay the balloon payment, consider shopping around for another type of home loan that better suits your budget.
These kinds of mortgages permit homeowners to make “interest-only” payments for the first several years (along with the choice to pay principal as well, if desired). These types of mortgages have a structure that is similar to adjustable rate mortgages, and can be worth contemplating if you expect your yearly salary will be increasing in the future.
If you are thinking about buying an expensive home and plan on financing most of it, you may need to apply for a jumbo mortgage. The loan amounts that are eligible for a jumbo mortgage are enforced by government-sponsored agencies, such as Freddie Mac and Fannie Mae, and these amounts change on a yearly basis. Jumbo mortgages usually come with higher interest rates because the amount of money being borrowed is substantially higher than the amounts borrowed from traditional mortgages.
Also referred to as an ARM, an adjustable-rate mortgage does not have a firm, set interest rate. This kind of mortgage attracts many borrowers because the initial interest rates can sometimes be quite low. However, as interest rates rise, so will the monthly payments. Therefore, be sure to find out ahead of time if the monthly payments that are associated with the highest interest rate possible under the terms of the ARM, will still be within your ability to pay.
When applying for a home loan, it is often required to have money that can be used as a down payment. Depending on how much cash you have to put down on your soon-to-be home, it can mean the difference between getting your mortgage application turned down or approved. And when you have extra cash to put down on your home, your mortgage payments will be lower and you will have more mortgage options to choose from. Depending on the percentage you put down and type of mortgage you choose, you may be able to cut down on the amount of you spend for mortgage insurance: or you might not even need to pay for mortgage insurance.
If you need money now, and you’re the recipient of structured settlement payments, Peachtree Financial Solutions can help. We provide customers with a lump sum of cash by purchasing some or all of their future payments. In exchange for selling future payments, customers receive a lump sum of cash. By selling your future payments, you can have the money you need to make a down payment on a home when applying for a mortgage.
To learn more about how you can receive a lump sum of cash from the sale of your future structured settlement payments, contact Peachtree Financial Solutions today. We can explain the process to you in further detail and provide you with your very own, personalized quote—free, no strings attached.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.