Home Loan Basics
Whether you are a first-time home buyer, or just need a review, these basic actions and terms will help you get a better grasp on home loans and mortgages.
Being pre-approved isn't a promise that you’ll get a loan, but it can put more buying power into your hands. Essentially:
A mortgage pre-approval only means a loan officer has looked at your finances—your income, debt, assets, and credit history—and determined how much money you can borrow, how much you could pay per month, and what your interest rate will be. (Source)
Not only does this information strengthen your offer, having it can help you close a deal more quickly.
A fixed rate mortgage is exactly what it sounds like: a loan that stays the same (including the interest rate) through the term of the loan. Some are 15 years, some are 30. So this is a good option if you plan to stay in one place.
An adjustable-rate mortgage is when the interest rate on the loan changes depending on the market and cost to the lender. Some lenders do have interest rate caps, which is something you should ask about if you go this route.
Some Common Types of Conventional Mortgages
· Amortized (Self-liquidating) Mortgages.
· Adjustable Rates Mortgages (ARMs)
· There are many others, such as Balloon Mortgages, Swing Loans, etc
Some Common Types of Non-Conventional Mortgages
Federal Housing Administration - Insured Mortgage Loans (FHA). The FHA which operates under the Department of Housing and Urban Development (HUD) insures the repayment of the loan in the event of foreclosure and deficiency. These loans typically allow for a smaller down payment from the Borrower, and require the Borrower to pay for mortgage insurance, either upfront or included in the monthly payment.
Veterans Administration-Guaranteed Mortgage Loans (VA) (GI). The VA loans are made for similar purposes as FHA insured loans and are backed by the US government. The difference, however, is that VA loans are guaranteed rather than insured. VA loans are available for anyone who served for a minimum of 90 consecutive days active duty in certain time periods including un-remarried spouses of service members who died in service or from service connected causes.
There are other non-conventional loans that may be available such as Hawaii Housing Authority (Hula Mae) Mortgage Loans, or Employee’s Retirement System (ERS) Mortgage Loans. These are not always available, so check with your Realtor and your mortgage loan officer beforehand.
Read more about different types of Home Loans here.
Everything You Need To Know About Securing A Hawaii Mortgage
If you're interested in buying or selling a home and would like to work with someone who knows the ins and outs of Maui Real Estate, reach out to one of our experienced Realtors by calling 808.879.3402, or you can reach one of us directly from our website at www.bellorealty.com. Mahalo for choosing us!
Posted by Kaitlen Conney on
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