Home Loan Info

Home Loan Info

Assisting You In Your Home Loan

Home Loans

When you start looking for a house, especially your first house, the biggest thing you have to look for is your home loan. Without it, you won’t get very far in your home purchasing. These days there are so many kinds of loans and they can make your head spin if you don’t know what the differences are. They also can get you into trouble if you don’t understand how they work before signing the loan papers.

Fixed Home Loan

The best and easiest to understand is a fixed loan. These are 15 or 30-year loans, The 30 year loan have lower payments but a higher interest rate since the bank has to wait longer to get the loan paid back. Some fixed home loans can be paid off early without penalty but you should know this before signing the paperwork so that if you are able, you won’t have problems owning your house full and clear. These loans are also the best for those on a budget because you know exactly what you will be paying each month on your mortgage.

Adjustable Rate Loan

Next is an adjustable-rate home loan. They start off at one rate and after so many years will rise or fall with where the market is. Usually they start off three or five years at the original rate and then will adjust yearly until the loan is paid off. This kind of loan can be good in years where the rate keeps lowering but if it suddenly skyrockets one year you could end up paying double what you were when you first got the loan. A combination of this is a convertible loan that starts as an ARL and will allow you to switch to a fixed loan at or before a specified time.

Balloon Type Home Loan

The final type of loan is a balloon loan. These are interest only loans where you don’t pay on the principal of the loan amount until the end, when the entire amount is due. Most people who get these kinds of home loans are going to refinance in a few years and they are not recommended as a long-term home loan.