A house is the largest single purchase most people will make in their lifetime. Few people have the cash on hand to purchase a home without some type of financing. Consider these three types of financing for your next home purchase.
1. Fixed-rate Mortgage
A fixed mortgage from a mortgage lender Hoboken NJ is the most commonly used financing option for home purchases. These loans are usually for a term of 15 or 30 years. The interest rate and payment stay the same for the life of the loan.
This option is a good choice for people who prefer to know what their payment will be for the lifetime of the loan and do not plan to sell in the near future. These loans usually require a down payment, so they are best suited to buyers who have sufficient cash on hand.
2. Adjustable-rate Mortgage
The main benefit of an adjustable-rate mortgage is that the interest rate is usually lower than what you would get with a fixed-rate loan. However, the tradeoff is that the interest rate can go up, resulting in higher mortgage payments over time. The initial interest rate is usually locked in for five or 10 years, after that the rates can change.
This option is best suited for people with lower credit scores, because they usually can not get favorable rates, if they can get approved at all, on a fixed-rate loan. It is also a good option for people who plan to sell their home before the initial fixed interest rate period expires.
3. FHA Loan
The main draw of an FHA loan is that it requires as little as a 3.5% downpayment. This makes an FHA loan an attractive option for buyers with little money to put down.
There are many financing options available for home buyers. A mortgage professional in your area should be able to help you pick the best one for your needs.