If you are interested in purchasing a luxury condo or loft, you will likely need to obtain financing to assist with your purchase. With many different type of mortgage loan options available to select from, it is important to learn more about your options so you can choose the loan that is best-suited to you and your needs. Here is a look at just a few of the home mortgage options you have to select from.
Fixed rate mortgages are the most common type of loan obtained by those who are purchasing a home. With this type of loan, the interest rate remains the same throughout the lifetime of the loan. In general, these loans have 10, 15, 20, 30, 40 and 50-year terms.
If you would rather take advantage of fluctuating interest rates, you may prefer to get an adjustable-rate mortgage, or ARM. There are many different types of ARMs available, but the basic idea is the same with all of them: the interest rate is directly affected by changes in the Prime Rate. How frequently your interest rate is adjusted in accordance with the Prime Rate, however, will differ with the specific type of ARM you obtain.
While there are several different government programs available, the two primary types of government-backed loans available are FHA loans and VA loans. The traditional FHA loan is available to only first-time homebuyers, while VA loans are available to eligible veterans and their spouses. While both types of loans are backed by the government, the actual loan is issued by a lending institution and you are responsible for negotiating the interest rate with the lender. Since your loan is backed by the government, the required down payment is significantly reduced. With FHA loans, you typically need to have a 3.5% down payment, while VA loans do not require a down payment at all.
Interest-only loans allow you to pay toward just your interest for a period of time, after which you are required to pay off the full balance of the loan. Therefore, this is a good option if you plan to move within a short period of time or if you are confident you will have the money available when the loan comes due.
If you do not have the 20 percent necessary for a down payment with a conventional loan, you may choose to obtain a piggyback mortgage. With this type of loan, you take out two loans: one for the down payment and one for the rest of the amount needed to purchase the home. These loans may be fixed-rate loans, ARMs or a combination of the two.