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:
- Mortgage Applications Rise as Interest Rates Drop
Mortgage brokers around the U.S. saw an increase in applications this week after a sharp drop in mortgage interest rates, according to USA Today. Mortgage interest rates fell to an average of 5.97% from 6.33% the week before. In some places, rates have been as low as 5.25%. Part of the rush to apply for [...]
[November 28th, 2008] - Fannie Mae, Freddie Mac Foreclosures Take a Holiday
Mortgage finance giants Fannie Mae and Freddie Mac say they’ll suspend foreclosures and evictions during the holiday season. The suspension will last from Nov. 26 to Jan. 9. The move is part of a recently announced plan to restructure mortgages for delinquent borrowers by changing the terms of their loans. People who are three months behind [...]
[November 21st, 2008] - FDIC Chairwoman Proposes Plan to Reduce Mortgage Payments for Delinquent Borrowers
Another proposal has been floated for helping homeowners who are delinquent on monthly payments on their mortgages. Federal Deposit Insurance Corporation (FDIC) Chairwoman Sheila Bair proposed a plan to reduce mortgage payments for delinquent homeowners to 31% of their monthly income, according to CNN Money. To qualify, people would need to be at least two [...]
[November 14th, 2008] - California Proposal Would Stay Foreclosures for 90 Days
Gov. Arnold Schwarzenegger detailed a proposal to stay mortgage foreclosures for a period of 90 days in an effort to help troubled homeowners who have received a notice of default in California. The state accounts for a third of the nation’s foreclosure activity each month, according to RealtyTrac. The proposal would allow certain mortgage lenders to [...]
[November 7th, 2008] - J.P. Morgan to Help Homeowners Who Are Behind on Mortgage Payments
J.P. Morgan announced that it would alter the terms of $70 billion of mortgages to help homeowners who are struggling to make payments. The move is aimed at stemming the tide of foreclosures that have rocked the U.S. housing market. Banks have been under pressure to do something to deal with the rising rate of [...]
[November 1st, 2008]
Recent articles related to Mortgages:
- Mortgage Rates Dip Only Slightly
According to the reports issued by the Mortgage Industry giant Freddie Mac, or FRE, the average interest rates applied to 30 year mortgage loans fell only slightly in recent history, but data regarding the general economy keeps mortgage rates at a higher elevation overall. Although the rates on long-term home loans have managed to slide down [...]
[August 15th, 2008] - From Foreclosure To Rental Troubles
Homeowners who lost their home to foreclosure are now facing significant problems when it comes to renting. Landlords and property managers are reluctant to rent homes and apartment units to those former homeowners seeing that foreclosure as a sure sign of continued economic distress. Credit checks are standard policy for many landlords as a way of [...]
[August 5th, 2008] - Dark Prospects For IndyMac
Earlier today, the major US mortgage lender IndyMac, based in Pasadena, Calif, released an open missive to its shareholders: the company is in trouble. In the document, IndyMac informed shareholders and the public that it plans to fire more than half of its employees, as well as ceasing all retail and wholesale lending operations. IndyMac [...]
[August 5th, 2008] - Countrywide A Target Of Another Lawsuit
The mortgage fallout in the United States is partially to blame for the current state of the global economy. The U.S. dollar is indeed suffering and is having an effect on the economies worldwide. In an effort to find the source of mortgage lenders who may have committed fraud that led to the collapse of [...]
[August 4th, 2008] - May’s Foreclosures Are In Full Bloom
The declining U.S dollar and the country’s weak job and housing market is to blame for the current world wide economic situation. To illustrate how the economy has yet to stabilize reports are showing that over 70,000 homes fell into foreclosure for the month of May alone. This number is a another huge blow to an [...]
[July 30th, 2008]
