Are you in the market for a new home or maybe an upgrade from your current home? Before you go jumping with both feet into the unknown you should probably do a little research about all the different types of home loans that are out there now a days for new buyers. Some of the jargon used in the descriptions of these loans can be confusing; while some may sound good they might not be right for you and vice versa.
Today we want to take a closer look into fixed rate home loans. This type of home loan vary greatly from an adjustable rate home loan. The fixed rate loans mean you pay the same amount each month, each year, for the entirety of your loan. The adjustable rate means your mortgage rate can fluctuate from year to year depending on the bank and figures. Traditionally the adjustable rate loans seem to be the better choice…in the beginning, when they begin to adjust and increase you could end up paying double what your payment started at.
This adjustment has been a problem for many homeowners; once the rates change it can double your payment if not triple it depending on how high the jump is. A fixed rate home loan is one of the safest choices when it comes to home loans, because you will always know what your payment will be and if it does change with a fixed rate loan the amount won’t be that drastic.
A fixed rate home loan can be chosen with more flexibility. For example, NPBS feature-rich fixed rate home loans come in 1, 2, 3, 4, 5, 7, or even 10 year increments. These time frames for repayment can vary depending on the institution that is taking care of your loan, some places will allow you to opt for a 15 or 30 year fixed rate loan as well. Don’t let the fixed rate loan title fool you, when you have some extra cash you can pay more onto the principle of your loan in order to repay it quicker.
When you take out a reverse mortgage it pays you, rather than you having to make monthly payments to your lender. How a reverse mortgage works is by allowing you to request reverse loan payments to be made to you on a regular basis or ask for one large payment all at once. By taking out this particular type of home loan, you can avoid having monthly loan payments. You won’t owe the balance back on the loan until you move out of your house. In the event that you pass way, your family can choose to allow the house to be sold, in which case the lender would keep proceeds equal to the loan balance and any leftovers would go to your family. Alternatively, your family can pay off the loan balance themselves and keep your home.
It cannot be stressed enough to be smart when you are purchasing a new home, do your research when it comes to types of loans as well as all the different institutions that can provide loans, you might have better luck at a bank a little further than your current location. Bigger cities or towns tend to have better rates when it comes to home loans, so browse around before you settle on a final home loan.