One way for you to get your desired home is through mortgage loan. Getting one though is not always easy. However, when you have all the necessary documents, you can speed up the process. The necessary documents will show if you can really afford to have a loan or not. It will also show your source of income and of course, who you really are.
Before applying for a mortgage loan, you should first know your options. This will make it easier for you to decide on which one to get.
Fixed vs. Adjustable Mortgage Loan
The fixed rate loan carries the same interest rate all through the duration of the payment period. The amount of interest that you will be paying per month will never change. This is true whether you will pay your loan in 5 years, in 10 years, or even in 10+ years. The only disadvantage to this type is that the interest is a bit larger than the others.
On the other hand, the adjustable rate loan carries an interest that changes every now and then. In most cases, the interest will change yearly after a certain amount of time. For example, in a 5/1 term, the rate for the first 5 years is fixed. After the 5th year, it will then start to adjust. The interest rate for this type of loan starts as a small one. However, since it changes over time, there is a chance that it will become bigger.
Conventional vs. Government-Insured Loan
A conventional mortgage loan is a loan that is not guaranteed or insured by the government. On the other hand, the government-insured loan speaks for itself and it has three forms.
The first one is the FHA loan. FHA stands for Federal Housing Administration. Anyone can apply for this one. Once you are qualified, you will be required to pay a down payment of 3.5% of the total price. This little down payment is its most obvious advantage. The disadvantage though is that you will also be required to purchase mortgage insurance. This insurance will of course increase the amount that you will be paying monthly.
Next form is the VA (Veteran Affairs) loan. This is only applied to the members of the military service and their families as well. The advantage to this form is that no down payment is required. Upon qualification, the person can then receive 100% financing.
Third is HARP or Home Affordable Refinance Program. This is designed so that you can get a more stable and a more affordable loan. To qualify for such, you should make sure that your mortgage is guaranteed or owned by Freddie Mac or by Fannie Mae. You will then need to submit the required documents.
These are just among your choices when you are planning to apply for a mortgage loan. Regardless of which one you will choose, always remember to be responsible and pay punctually. If you will ignore your loan, time will come that you will face a huge financial problem or that your property will be taken from you.