AP NEWS

Sound OffSteven Loren What types of home loans are available to new buyers?

October 2, 2018

There are many decisions that need to be made when purchasing a home. One of the most important, and sometimes overlooked, decisions are the types of home loans available. This is why I always recommend you speak to a mortgage broker or banker to assist with your home financing needs.

One important piece of information is knowing the difference between a mortgage broker and a mortgage banker. A mortgage broker doesn’t represent one institution (bank) but works with many to shop for the best available loan. Think of them as the middle man between you and lender.

A mortgage banker that works for a specific institution (bank), can only provide products offered by their institution and they work directly for the lender.

Types of home loans:

Fixed-rate and adjustable-rate loans: Fixed-rate loans have a fixed interest rate throughout the entire length of the loan. It will not increase nor decrease during the life of the loan. Adjustable-rate loans have fluctuating interest rates, usually starting at a lower interest rate than your fixed-rate loan, but will fluctuate at predetermined intervals over time. Fixed-rate loans are popular among first-time home buyers and those planning to stay in a house for the duration of the loan. Adjustable-rate loans are popular with buyers who plan on staying only a few years, taking advantage of the lower initial interest rate.

Two-step mortgages: Have a fixed interest rate for an initial period, but then fluctuate based on market conditions.

Balloon mortgages: Start with fixed payments at a fixed interest rate for a predetermined period. Then balloons, with the remaining balance payable with a one-time payment.

VA & FHA loans: Are government supported loans for first-time home buyers with special features, including low down payment options, flexible credit and income guidelines.

This is by no means a comprehensive list of options, but it should provide you with a useful foundation when it comes to financing your home.

Steven Lorenz,

William Pitt Sotheby’s

International Realty,

(203) 940-2149,

SLorenz@wpsir.com

AP RADIO
Update hourly