Home loan needs are different for different home buyers because of the variable loan amount and because the financial status of borrowers is different, and they have different kinds of budgets for buying homes. Homebuyers must make a careful choice to maintain smooth repayments during the loan tenure, or else they might end up in a debt trap that could make them lose the property mortgaged with the lender. Knowing the different mortgage loan options from Prime Mortgage should help borrowers make the right choice to remain within their financial boundaries and continue with the loan comfortably. After all, buying a house is one of the largest investments for the average person during their lifetime, which needs some diligent decision making.
Mortgage loans are available in a wide variety to suit the needs of all kinds of home buyers. Each type of moving loan has its appeal, and borrowers must weigh the pros and cons by matching it with their borrowing goals to be comfortable with the debt.
Fixed-rate mortgage loans have an interest rate that remains the same throughout the loan tenure, whether it is 30 years or 15 years or anything in between. The long duration of fixed-rate mortgage loans is quite popular because of the low monthly payments. Since the interest rate does not change, borrowers are aware of the financial liability throughout the loan period and can plan their long-term finances accordingly. Fixed monthly payout allows borrowers to plan their finances better by avoiding any surprises later. A mortgage broker in Christchurch allows borrowers to plan their finances better by avoiding any surprises later. However, the longer the repayment is the total payback, the overall cost of borrowing can be higher in these cases.
Sometimes borrowers opt for a 30-year loan, and then later, if there is a dip in the interest rate, they can opt for a 15 year fixed rate loan to refinance the earlier loan and lower the monthly payments.
FHA mortgage loans have the backing of the Federal Housing Administration that insures the loan. These loans have the government’s backing and offer a more modest means of borrowing for homebuyers to buy a home. Due to its low barrier to entry, FHA loans are available to people with poor credit scores, too, and those with a credit score of 500 can qualify for the loan. However, the borrower must pay for mortgage insurance. Down payments are also low and often around 3.5%.
VA mortgage loans
The Department of Veterans Affairs back VA mortgage loans and available only to veterans and military service members. Although the loan entails an upfront payment of VA funding fees, it does not require making any down payment, which is advantageous. Moreover, there is no need for mortgage insurance which further lowers the burden of borrowers. This low interest and no down payment loan is highly borrower-friendly.
Backed by the US Department of Agriculture, the USDA loans are for buyers in rural and suburban areas with no down payment. Property value caps and income limits are applicable, and loans and grants are available for home improvements.