Mortgage Loans: 3 Types to Consider for Prospective Home Owners

The recent housing boom allowed lenders to devise creative financing options that often carried an element of risk. Since then, mortgage loans have become more straight forward.\r\n\r\nHere are the three most commonly offered today:\r\n\r\nFixed-Rate\r\n\r\nFixed-rate home loans offer the security of knowing that your interest rate will not increase at any time during the duration of your loan.\r\n\r\nThese loans carry terms of 10, 15, 20, or 30 years with the 30-year term being the most popular as it results in the lowest monthly payment.\r\n\r\nThese loans are structured in such a way that the majority of the interest is paid during the first few years of the loan while the amount applied to the principal increases over the life of the loan.\r\n\r\nAdjustable-Rate\r\n\r\nWhile a fixed-rate mortgage remains the same, an adjustable-rate mortgage, or ARM, can vary from year to year.\r\n\r\nA very popular version of an ARM, known as a Hybrid ARM, allows for the qualities of both a fixed-rate and an adjustable-rate mortgage.\r\n\r\nHybrids begin with a 3, 5, 7, or 10-year period in which the interest rate is fixed after which point the interest rate is adjusted annually. These loans often offer a cap on the interest rate that cannot be exceeded.\r\n\r\nInterest-Only Jumbo\r\n\r\nInterest-Only Jumbo loans may be applied to homes sold over $625,500 making it a good fit for wealthy home buyers with irregular incomes.\r\n\r\nIt gives the borrower the option of paying only interest for the first 5, 7, or 10 years after which the interest rate is adjusted annually. At this point, the monthly payment usually increases considerably as it is then applied both to principal and interest.\r\n\r\nWhatever loan you choose, let Provident Homes Corp. offer you a home building process marked by honesty and experience resulting in a house that is both energy efficient and thoughtfully designed. If you desire to live in the neighboring communities of West Chester, PA, allow our standing family traditions of quality work, proven efficiency, and building experience to be a part of your home buying adventure.