Underground Journal

Different Kinds of Home Mortgages

There are several kinds of home mortgages and each provide numerous possibilities to meet the needs of most home buyers. The main types of mortgages are the fixed and adjustable variety. A fixed rate mortgage, like its name implies, stays at the same interest rate for the life of the mortgage. In this way the monthly amount that is paid stays the same. However, the mandatory insurance and taxes will rise. The usual time span for fixed rate mortgages are either for 15 or 30 years.

There are adjustable rate mortgages that will reset upwards or downwards at specified times. This could be every year or at different intervals. This loan is risky, in that if the interest rate goes up and the salary does not, problems can develop in the ability to pay the mortgage. There are variations within this mortgage such as when the loan will reset and there are some adjustable rate mortgages that give the buyer the option to convert to a fixed rate mortgage at a set time. Do not take a “teaser loan” with a very low introductory rate, which after a year or so rises rapidly.

Home mortgages have proliferated recently giving buyers even more choices. The fixed rate mortgages are now offered in 40 year and 50 year time spans. There are now no income check mortgages available which are becoming harder to obtain due to the recent housing problem. No longer are NINJA loans available, which are no income check, no asset check and no job check by the lender type loans. One loan where no equity is gained is called the “interest only mortgage.”

To lower interest rates the buyer sometimes has the option of paying points (a percentage of the loan amount) before the closing. The mortgage rate is tied to key indices, the most used is the 10 year treasury note. Usually a mortgage will not have a prepayment penalty but the necessary attorney whom is hired will check that out.

If you would like more information about Wisconsin home mortgages, then contact Providence Home Lending and get the answers you need.

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