Many different types of mortgages are out there on the market - supposedly catered to just about every need you could have. While some make it easy to get a mortgage, that alone may not be a worthwhile goal - if it gets you the wrong kind of mortgage loan. Use our application form below to get a great quote today.
There are some types of mortgages you should try to avoid and we will endeavor to explain why they may not be the best thing for you.
Before any of these are mentioned, it needs to be said that for some of these, there may be situations where they could be good. Overall, though, people need to be careful in each case.
Balloon Mortgages
This type of mortgage loan gives you low payments up front for a specified number of years, and then the balance of the mortgage becomes due - in full. Often, this arrangement is used to be able to get a larger home with a lower payment until finances get better. It is good though, for investors, who only want to keep it for a little while and then turn around and sell it. Another good reason could be if you know that you are only going to live in it for a few years. Be careful, though, because it could force you into refinancing at a new rate that you may not be able to pay.
125% Mortgages
These mortgages offer you the possibility of being able to get a mortgage on a new house, and also be able to have extra money too.
The best applicant that is really suited for is someone who is sure they are on the fast track to success. Heading in that direction, however, may not be good enough. If there is a promise of a larger income, soon, and you know that you can pay down the mortgage balance to a below 100% level, then it may be for you. Otherwise, there is a danger of not having any equity in the house for a long time.
Interest Only Mortgages
Interest only mortgages imply that you will only pay the interest. In reality there is no such thing as an interest only mortgage, because eventually you will pay the principal, too. These home mortgages provide a lower fixed payment for a few years, then will switch to a payment that will fully amortize it. Because the payment is about 8% lower than one that would be fully amortized, it allows the buyer to get more house for a smaller amount, initially.
When it goes to the normal amortized payments, an interest only mortgage must go to a much higher monthly payment, which could be hundreds of dollars more, in order to make up for the lower payments that did not allow full amortization. For many, refinancing would become necessary, or moving.
The person that this type of mortgage is ideal for is one who knows about investing and can see a greater profit with the difference, than the amount of interest on the mortgage loans. Another individual, would be the one that is confident that a greater income is on the way.
Rebuild.org brings you the latest news headlines related to Mortgage Loans:
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Does it make sense to do mortgage refinancing or get a home equity loan to take cash out of a home?
[July 1st, 2009] - Mortgage Unemployment Insurance
Mortgage unemployment insurance can help a homeowner keep making monthly payments on a mortgage after a layoff.
[June 26th, 2009] - Pay Your Mortgage and HOA Dues to Avoid Foreclosure
It's important to stay current on payments on a mortgage and HOA dues to avoid foreclosure.
[June 18th, 2009] - A 60-Second Guide to 40-Year Mortgages
There are still lenders advertising 40-year-mortgages. While not all mortgage lenders offer these loans, the government’s mortgage rescue plan allows the terms of a mortgage loan to be extended to 40 years from 30 to help reduce monthly payments. But are 40-year mortgages a good idea? Here are some things to consider. Lower Payments, More Interest Most [...]
[June 12th, 2009] - 4 Ways to Spot Mortgage Fraud
The Treasury Department had 62,000 reports of mortgage fraud last year. Here are four ways to spot a scam.
[June 4th, 2009]
Recent articles related to Mortgages:
- Your Mortgage Loan: Consumer Debt Can Jeopardize Homeownership
This week President Obama presented a proposal to Congress for a new federal agency assigned the task of protectecting consumers from practices designed to keep consumers in debt. As expected, financial insitutions are protesing the proposal. The president of the American Banker’s Association noted, “It’s going to be a long fight,” indicating financial institutions’ resistance to Obama’s proposal. [...]
[July 2nd, 2009] - Record Demand for Mortgage Loans Increases Potential for Fraud
The Federal Housing Administration (FHA) is facing record demand for its home mortgages, which are backed by the US government. The failure of the once flourishing sub-prime mortgage market has resulted in many more home buyers seeking mortgages through FHA. Kenneth Donohue, Inspector General of the US Department of Housing and Urban Development, cautioned legislators that [...]
[June 20th, 2009] - Adustable Rate Mortgage Resets Threaten Housing Recovery
Bloomberg Press reports that more than one million adjustable rate mortgage loans (ARMs) are due to reset between now and 2013. Of these, about 75% are expected to reset in 2010 and 2011. Homeowners who’ve enjoyed very low mortgage payments may find their payments unaffordable once they reset according to the terms of their mortgage loans. Although many [...]
[June 11th, 2009] - Mortgage Loan Rates Highest Since December 2008
Rates for 30 year fixed rate (FRM) mortgage loans rose from 4.91% to 5.29%, the highest since last December. The National Association of Realtors notes shows that sales of existing homes rose by 6.7% in April, which is attributed to lower mortgage rates allowing more buyers to qualify for a mortgage loan. Although homeowners seeking [...]
[June 5th, 2009] - Fixed Rate Mortgage Rates Rising
CNN Money reports that fixed rate mortgage (FRM) rates spiked to 5.45% on May 27, up 21 basis points from 5.24% last week. Investor concerns about GM’s potential bankruptcy may have influenced the 10 year Treasury yield, which is connected to FRM rates. The 10 year Treasury yield has recently risen its highest rates since November 2008. Government [...]
[May 28th, 2009]
