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Mortgage

In: Business and Management

Submitted By commodude11
Words 788
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Mortgage Type of Mortgage | Pros | Cons | Fixed-rate mortgage | No surprises The interest rate stays the same over the entire term, usually 5, 10, 15, 20 or 30, or 50 years. | If interest rates fall, you could be stuck paying a higher rate. | Adjustable-rate (ARM) or variable-rate mortgage | Usually offers a lower initial rate of interest than fixed-rate loans. | After an initial period, rates fluctuate over the life of the loan When interest rates rise, generally so do your loan payments. | FHA (Federal Housing Administration) loan5% Down payment | Allows buyers who may not qualify for a home loan to obtain one Low down payments, 3.5% Low closing costs, no credit score requirements | The size of your loan may be limited.The house has to be appraised and meet criteria | VA loan | Guaranteed loans for eligible veterans, active duty personnel and surviving spouses Offers competitive rates, low or no down payments. | The size of your loan may be limited. | Balloon mortgage20% | Usually a fixed rate loan with relatively low payments for a fixed period. | After an initial period, the entire balance of the loan is due immediately This type of loan may be risky for some borrowers. | Interest-only30 yrs 100, 0006.25% down payment $520.83 | Borrower pays only the interest on the loan, in monthly payments, for a fixed term. | After an initial period, the balance of the loan is due. This could mean much higher payments, paying a lump sum or refinancing. | Reverse mortgageNo Down Payment | Allows seniors to convert equity in their homes to cash; you don't have to pay back the loan and interest as long as you live in the house. | Subject to aggressive lending practices and false advertising promises, particularly by lenders that prey on seniors. Check to make sure the loan is Federally insured. |

2nd Mortgage- Taking out an additional loan on your homes equity
Bridge / Swing Loans

These types of mortgage loans are used when a seller has put a home on the market -- but it has not yet sold -- and the seller wants to borrow equity to buy another home. The seller's existing home is used as security for a bridge (also called swing) loan.

Closing Costs are usually negotiable with the seller In addition to the down payment, you'll also have to pay closing costs — miscellaneous fees charged by those involved with the home sale (such as your lender for processing the loan, the title company for handling the paperwork, a land surveyor, local government offices for recording the deed, etc.). The average closing costs percentage is usually about 2-5% of the purchase price. And to be clear, nobody chooses a specific percentage number—the closing costs will just happen to add up to some percentage.

Your lender will give you an estimate of closing costs on the purchase of a particular house you've selected. This is called a "Good Faith Estimate" ("GFE"). If they don't give it to you, ask for it. Then, the day before the closing, ask your lender for the actual "Settlement Statement" (aka "the HUD" or "the HUD-1"), which is the final and complete form with all the numbers for the sale, including the actual closing costs.
It's generally accepted that 30 to 35% is about right for housing expenses. That would include rent, plus utilities, any maintenance and decorating.

References
Common Types of Home Mortgages | USA.gov. (n.d.). Retrieved from http://www.usa.gov/topics/family/homeowners/buyingselling/mortgages/types.shtml
Fixed Rate Mortgage Calculator - online financial calculators. (n.d.). Retrieved from http://tcalc.timevalue.com/all-financial-calculators/mortgage-calculators/fixed-rate-mortgage-calculator.aspx?LOANAMOUNT=%24150%2C000.00&DOWNPAYMENT=20.000+%25&DOWNPAYMENT_TYPE=Percent&TERM=30&TERM_UNITS=Years&INTERESTRATE=5.700+%25&COMPUTE=COMPUTE&CALCULATORID=HF02&HIDEFORMTAG=TRUE&TEMPLATE_ID=www.timevaluecalculators.com_1&PostBack=true#results
How Much of a Down Payment Do I Need For A Reverse Mortgage? (n.d.). Retrieved from http://www.omnireversemortgage.com/reverse-mortgage/how-much-of-a-down-payment-do-i-need-for-a-reverse-mortgage/
How Much Should I Spend on Housing. (n.d.). Retrieved from http://www.betterbudgeting.com/articles/budgeting/spendonhouse.htm
Leaving Facebook... (n.d.). Retrieved from http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.mtgprofessor.com%2FTutorials2%2Finterest_only.htm&h=aAQFVf6aF
Leaving Facebook... (n.d.). Retrieved from http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.timevalue.com%2Fproducts%2Ftcalc-financial-calculators%2Fballoon-mortgage-payment-calculator.aspx&h=-AQFA-0yD
What Are Closing Costs and How Much Are They Typically? - Zillow. (n.d.). Retrieved from http://www.zillow.com/mortgage-rates/buying-a-home/closing-costs/

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