Thursday, August 9, 2012

The Basics of the Various Types of Mortgage Loans

Now that you have decided to purchase a property in Bellingham real estate, you need to be aware of a lot of things about the process of home buying, including the various types of mortgage loans available. Obviously, not all of them are the same and you need to take each of these loans into consideration so you will know what would be best for you. This can be a bit tricky, especially if it's your first time. The different kinds of mortgage loan programs include, but are not limited to, the following:

1. Adjustable-Rate Mortgage or ARM - The rate of interest of this type of mortgage loan normally rises and falls; it can move up or down every year, every six months, every month, or it might even remain unchanging for some period of time and then alters again.

2. Mortgage Buy Downs - Those borrowers who like it better to pay a lower rate of interest in the beginning usually choose this kind of mortgage loan program. In mortgage buy downs, the rate of interest is lowered since costs are paid to have the rate reduced. This is why it is called a buy down. Anyone could purchase the interest rate down for the borrower: it can be the lender, the seller, or the buyer.

3. Streamlined-K Mortgage Loans - This is a type of program by the Federal Housing Administration or FHA. It lends money to borrowers so that they can repair a house by moving the money into a single mortgage loan. The limit of the amount for repair work is smaller in this loan; however, the benefit of this program is that it only calls for less paperwork and also, it is much easier to get this compared to other mortgage loans.

4. Swing / Bridge Loan - This type of mortgage loan program is utilized when a seller has to put a house up for sale and desires to borrow equity so that he can buy another home, but the property for sale has not been sold yet. The existing home of the seller is used as refuge for a swing loan, which can also be referred to as a bridge loan.

5. Equity Mortgage Loan - Generally, a borrower acquires this type of mortgage loan to obtain cash. These loans may be fixed, adjustable, or a credit line in which money can be drawn when necessary.

6. Reverse Mortgage Loans - Individuals who can be eligible for a reverse mortgage loan are those people who are 62 years old and above and has sufficient equity. As the name implies, this loan works in reverse; instead of paying the lender every month, the lender makes payments to the borrower every month for as long as the latter lives in the home. The rate of interest in this kind of mortgage loan can either be fixed or adjustable.

A lot of various types of mortgage loan programs exist these days. For this reason, it is very important to take each loan into consideration before you make any decision about this matter. It's advisable to get help from your real estate lawyer or agent so that problems can be avoided, or if not, everyone will be prepared. It's wise to make sure that everything's alright when purchasing a property from Bellingham homes for sale.

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