Types of Mortgage Loans

Until some years ago, there would only be three major mortgage loan types that would be available to a potential home buyer. The buyers could have a conventional fixed-rate mortgage, a VA loan, or an FHAloan. Times are very different now. There are a wide variety of mortgage loan types available, something that could not have been imagined until a few years ago. We will discuss here some of the popular types of mortgage loans on offer.

Most Popular Mortgage Loan Types

Fixed-Rate Mortgages:  This is perhaps the oldest of them all. Today, one can opt from 5-year right up to the 50-year fixed rate loans, and all of them are fully amortized.

FHA Loans:  The FHA or Federal Housing Administration mortgage loans have been insured by the Federal Government through the mortgage insurance that has been funded into the loan. The ideal candidates for the FHA mortgage are the first time house owners as the down payment requirements are the least in this type of a loan and also the FICO scores are not considered.

VA Loans:  The VA Loan is a type of a government loan that is available to the veterans who have served in the U.S. Armed Services and also in specific cases available to the spouses of the deceased veterans. The requirements may vary depending on the year of the service and also whether it was a honorable discharge or a dishonorable one. The main benefit in getting a VA loan, if eligible for it, is that the borrower need not put in a down payment for this loan. The loan is also guaranteed by the Department of Veteran Affairs but is funded by conventional lenders.

Interest-Only Mortgages Types:  It may be a bit misleading to call a mortgage loan an interest-only mortgage as these types of loans are not actually interest only, that is the borrower need to pay only the interest on the loan. The so called interest-only loan types have an option to make the payment for only the interest component for a specific period of time. However, there are also some junior loans that are actually interest only and need a balloon payment of the capital amount at maturity.

In addition to these very basic mortgage loans available, there are also some hybrid options available in the market now. For example, an option ARM loan is a complicated form of mortgage. They are an adjustable rate loan, which is to say that the interest rate fluctuates depending on specific conditions. As the name implies, the borrowers for this type of loan can opt from a variety of payment options as well as index rates. But one has to be aware of the minimum payment option, which can even result in a negative amortization.

Another hybrid loan type is the piggyback mortgage. This type of a loan financing may consist of two different loans: a first and a second mortgage. The mortgages have the option to be adjustable-rate mortgages or a fixed rate or even a combination of the two. The borrowers actually take out the two loans and the down payment is less than 20% so as to avoid paying the private mortgage insurance. 

If you are looking into your loan options, please give us a call today. Horizon Lending Services is here to help you in any way we can.

3 Facts About Reverse Mortgages

Reverse mortgages are a great loan option for individuals over the age of 62. They are easy to qualify for because they don't require a credit check or employment verification, so if you are wise and of age, this may be a great option for you.

Fact #1 About Reverse Mortgages.

You can spend the equity that has built up in your home however you please. If you have medical bills that need to be paid, home upgrades, or maybe you want a new pet anaconda, you can use your home equity money.

Fact #2 About Reverse Mortgages.

You no longer make payments to the lender! What? How is this so you ask? The lender who is providing the reverse mortgage will make disbursements to the owner of the home . The loan amount and interest will cause the balance of the loan to increase each month because they are getting cash payments based on the home equity.

Fact #3 About Reverse Mortgages.

You have all the power and ability to have a comfortable retirement. The older you get, the more you might worry about retiring, but with a reverse mortgage, there is nothing to fear. This allows you to spend money where it needs to go. For many individuals, this loan can be a lifesaver, and here at Horizon Lending Services, we want to offer you a great solution. If you are interested in learning more about our Reverse Mortgages, call us today! We are happy to answer any questions you may have.

Is Buying a Home in Your 20’s Difficult?

Modern day young adults are beginning to seek the “American Dream” by making their first large purchase, a home. Buying your first home is a big deal and after working hard and saving up, it is an exciting moment in life. How do you know if this is the right time? Here are a few things to consider before making the large leap into true adulthood.

What are the Differences Between Buying and Renting?

There are a large majority of experts who believe buying is the way to go, but before having your mind set for you, here are a important advantages to renting.

Why Not Buy a Home?

Buying means that you are tied down to that property until you decide to sell. If you don’t plan on staying in that location for three to five years, (long enough to recoup the losses of the purchase) buying might not be for you. When you rent, the most common lease length signed is one year, giving you freedom to move after that year is up if you choose to.

Buying means less “me” time. When you own a home, there are many benefits, but one of the largest downsides is maintaining the home yourself. If something breaks, you don’t have a landlord to fix it, it is all up to you. Congratulations! All the things that go along with home maintenance like mowing the lawn, getting regular termite inspections, and making sure all your filters throughout the house are clean are all your new responsibilities.

Why You Should Definitely Buy a Home.

A benefit that makes buying the way to go is that you can personalize your home exactly the way you want it. You can tear out a wall, paint your house purple, have 24 cats, and no one can stop you (except maybe your wife). After all, any improvements you make to the house can only increase the value!

Your home has a great chance of increasing in value. Over time, your home’s value will increase. This could take three years, or seven, but the increase is worth the twists and turns. If you decide to sell your home, any ROI is all yours!

Someday, you will no longer have a mortgage payment. One of the most obvious perks of buying a home is that someday, after writing checks for what seems like forever, you will pay your home off completely, or you can use the equity in your home to reinvest.

When you are in your 20’s, there are a lot of questions about what the right step is, but if you are considering buying your first home and want to speak with an expert who has your best interest at heart, call Horizon Lending Services. They have a wonderful group of compassionate people excited to discuss your options.