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Valencia, CA
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Belleville, WI
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Bellevue, WA
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Eastcoast Mortgage Company
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Northland Mortgage Corporation
Eureka, MT
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Your Mortgage Loan Options

If you are considering the purchase of a new home and are in the market for a mortgage it’s a good idea to find out about the different types of mortgages and loans that may be available to you as well as the different sources of real estate financing. This is especially true if you are a first time home buyer.

When it comes to real estate financing there are a number of different lending sources you can take advantage of. These resources commonly include commercial banks, savings and loan associations, insurance companies, mutual savings banks, mortgage brokers, mortgage banking companies and credit unions. Be sure to consider each option carefully and take into consideration the terms and conditions that may apply with each.

You will need to complete an application regardless of whether you choose a mortgage broker or some other type of funding source; however. This application will provide the prospective lender with information needed to determine whether it is feasible to provide you with a loan. Such information requested on the application might include your income, financial obligations and the sources for all your income.

There are also a variety of repayment plans for your new mortgage. Most mortgages today are fully amortized which means that the payments will be the same every month for the duration of the loan. That isn’t the only way a mortgage loan can be handled; however. For example, with a straight payment plan, interest only mortgage payments are made periodically and then at the end of the loan term the principal amount of the loan is paid in full. For the most part this type of loan is only used for second mortgages and home improvement projects; however.

With a balloon payment, the payments will remain the same every month for the length of the loan. The difference; however, is that the last payment will be significantly more than previous payments. This type of loan is partially amortized rather than fully amortized. The advantage of this type of loan is that monthly payments may be somewhat lower than you might obtain with a fully amortized loan. The disadvantage is that at the end of the loan term you will need to come up with a large last payment that may total several thousand dollars.

It is also important to consider the differences between various types of loans. For example, with a conventional loan, you may be able to borrow up to 95% of the value of the property at current interest rates. With this type of loan; however, you will be subject to what is known as private mortgage insurance, or PMI. This insurance will insure the top 20% of the loan and reduce the risk of the lender in the event you default on the loan. The insurance will be added to your monthly mortgage payment each month.

You might also consider a FHA loan. With this type of loan the risk of the lender is also reduced because the mortgage is insured by FHA. You will need to pay a one time mortgage insurance premium for the insurance FHA will use to back the loan; however. A major advantage of this type of loan is that there are no prepayment penalties. To acquire this type of loan; however, the home you select must be able to pass an inspection by a FHA approved inspector.

By taking the time to consider all of your options regarding your next mortgage loan you can be sure you will be in a better position to make a more informed decision that will be right for you and your particular situation.
 
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