Ben Horne asked:


There are three major types of home mortgages - fixed-rate mortgages, adjustable rate mortgages and alternative or combination mortgages. Each of these has its benefits and disadvantages along with different types of lending and interest setups within each major type. To learn more about the pros and cons of the different types of home mortgages, keep reading.

Fixed Rate Mortgage

A fixed rate mortgage is your standard, typical, mortgage. Its main advantage is that your housing costs are predictable - you know how much you can expect to pay every month, when your mortgage will be paid off and exactly how much it will cost you in interest payments.

Typically, a fixed rate mortgage comes in a 30-year term. However, homeowners who are refinancing their homes have increasingly been tapping into shorter 15-year terms, while first time home buyers sometimes consider terms as long as 40 years in order to pay less on their monthly debt.

Another popular type of fixed-rate mortgage is the bi-weekly mortgage. Because making your mortgage payments on a bi-weekly basis allows you to make two extra mortgage payments every year (therefore the equivalent of 13 monthly payments instead of the normal 12) , you can pay down your mortgage faster and save tens of thousands of dollars on interest alone.

The major disadvantage of a fixed rate mortgage is that if you get your loan when interest rates are high, you’re locked in at that rate. So, if interest rates fall, you lose out on that potential interest savings and would then need to walk through the steps of refinancing the loan to get a lower rate.

Adjustable Rate Mortgage

Adjustable rate mortgages become very popular when interest rates are high. Typically, lenders offer a low, introductory interest rate followed by an interest rate that’s based on the market average, or slightly above the prime rate. In this scenario, as interest rates rise and fall, so do your mortgage payments.

Bear in mind, though, that the key risk with an adjustable rate mortgage is if the general real estate market rate rises, one’s monthly mortgage payment (on the interest) will rise as well.

If you’re part of a family that expects its income to rise over the years, are only planning to own your home for a short period of time, anticipate stable mortgage interest rates in the foreseeable future, or simply want to get into the housing market but the interest rates are simply too high to lock in with a fixed rate mortgage, than an adjustable rate mortgage is for you.

Combination Mortgages

It is possible to obtain mortgages that change their type as they mature. For example, the Super Seven or Two-Step mortgage gives homeowners a low, predictable interest rate for the first seven or ten years of their mortgage. At that point, their interest is reevaluated based on current market conditions.

The benefit? A lower interest rate to start, particularly if you plan to sell the home within 7 years. The drawback? Depending on rates, your interest rate could jump as high as 6 or 7 percent by the end of your term.

The type of mortgage you ultimately select for the purchase of a home is a weighty decision that must factor in a number of risks and personal circumstances. Before jumping into the excitement of new home - especially for first time buyers - you should talk over options with your spouse, other family members, and those who have some expertise in matters of finance and real estate.



Michael

pandit ji asked:


What do i need to have a joint ownership(joint equity), with another person, on my home for which i currently have a mortgage? I want to have this other person as 50% owner of the home and as well as the loan liability.
The house is located in Orlando FL. US

Aaron

me asked:


We were hoping that building a brand-new modular home would be the answer to our VERY frustrating and discouraging search for a new home.

But when my husband called the mortgage company today, they really burst that bubble! They say the interest rate will be higher on a modular. We are not talking “doublewides” here… My husband and I really had our eye on a couple of higher-end models that look as good as any other house I’ve ever seen. Better, even!

So, why the higher interest rate? And how much higher would it be? My dear husband did not press her for answers, but I want to know. Thanks…

Ron

radioactive_babywipes asked:


My credit isn’t bad or fair. It’s good, just below excellent. How good does your credit have to be and what other factors are key to successfully obtaining a home mortgage loan?

Jay

cocoa asked:


I found a home I really like but its $97000 and my income is $1600 per month. They can give me either option to finance myself or mortgage. I want a mortgage because I would like to have everything escrowed and then refinance after 2 years. My credit score is 561 and maybe I can get a better interest after 2 yrs. What would be my best option?

Susan

Meryl610 asked:


My parents get about $20,000 from soc security and medicare and they have no other income or securities. They had a savings account at the beginning to the year and used $6,000 of that for some home repair,and the rest for their cemetery plots, leaving only $1,000 left.

I deposited $30,000 throughout the year into their checking acct for them to pay all their medical, food, utilities, clothes, auto, etc. They own their home and pay mortgage, taxes, insurance, homeowners fees, and home repairs with this money, as well.

Can I claim them as dependents and add their medical expenses to my deductions? Does the fact that they own their home affect this?

David

Alan Lim asked:


If you have a home, then this means that you have a very powerful credit solution in your fingertips. A home means an equity and thus through a second mortgage or a house mortgage refinancing solution, you can pull some credit to cover your financial needs. Thus this will allow you to stabilize your financial situation, no matter what. Here are some incentives for which you can use a second mortgage or a home mortgage refinancing solution:

1) You can use home mortgage refinancing to get a lower mortgage rate for your house. This is a good way to reduce your mortgage home payments and lower the total overall payments with a lowered interest rate. Of course, you will have to do your calculations very carefully but you can save overall. Especially in times of economic calm, you can get good rates on your refinance interest rate.

2) You can use a second mortgage or a home mortgage refinancing as means of a debt consolidation loan. This is a great method to take care of all your other debts which may create pressure on you. If you have maxed out on your credit cards, if you have lots of unpaid bills, if you have trouble making your car loan payments etc. then it would be wise for you to get a second mortgage on your house and use it as a debt consolidation loan. This way you can pay off all your debts in one stroke and you will also be able to pay back your loan in a long term. Also the amount of interest will be much less with this method.

3) You can use a Home Mortgage Refinancing solution to create a capital for your Home based Small Business that you may be planning to open, or you may use it to inject capital for your existing business.

4) You can use this method to pay off your kid’s college tuition fees.

5) You can use this method to go to a well deserved vacation or to use it as a down payment to buy a new piece of equity. If you have a good investment opportunity, you can even use it to invest money somewhere.

As you can see, a home mortgage refinancing solution may come handy for variety of purposes. You will need to see various financing options that may be available on the market. The most important thing is the fact that you should spend as much time as possible to research your financing options. Everyone will give you different interest rates and different conditions for such a loan. Try to go online, as the Internet is the best source to get information on a second mortgage. However you will have to oversee various factors to get the best possible deal on your refinancing package. If necessary, you can employ a mortgage broker to search for your interest. Although you will end up paying a commission fee, you can get more savings in the process.



Charlie

Alpha Bravo Charlie asked:


I am working overseas, I want to buy a house in Texas. Can I consider it to be a 2nd home and ask the mortgage company to give me interest as second home instead of calling it “investment property” ?
The interest rates and taxes for 2nd home is less than investment property.

It will be rented out till we come back to Texas.

Marie

bubbie_king asked:


HELP!!!!

My wife and I would like to buy a home and/or land. I know that we can afford a payment of $400 a month, and we dont need anything special. A $40,000.00 loan would be sufficent.
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Problem is: I have NO clue how to go about this. How easy or difficult is it to get a home loan for a first time buyer?
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Anyone with similar experience in a similar situation? Please advise. Thank you so much!

Clinton

Speedracer asked:


Home was purchased in June 2006. Just curious to know. Thanks in advance for any help.

Cheryl