When you're in the market for a new home or a new home loan, there are many things to know about how each loan type works and which type you need. Here are three popular home loans that can save you money and help you have a better standard of living.
Purchasing a new home with a fixed mortgage
Buying a new home can be easier when you have a fixed mortgage loan. With this type of loan, your interest rate does not fluctuate, so your mortgage payment, independent of taxes and homeowners' insurance, stays the same month after month and year after year. It's a great way to keep the mortgage payment regular and to hedge against inflation. If you will be staying in your home for at least four years, a fixed mortgage is a good way to make your mortgage more affordable and to keep any interest rates changes at bay.
Refinancing an existing mortgage loan
If there is a significant drop in interest rates, or if your credit improves by a significant amount, it may be a good financial decision for you to refinance your loan. Refinancing your mortgage allows you to get a better interest rate and to benefit from a lower total loan amount if you have built up equity. Refinancing can be a good way to get a lower monthly payment without buying a less expensive home.
The reverse mortgage
For those who are at retirement age and want to begin drawing money out of their homes, there is the reverse mortgage. Just like it sounds, this is a way to get paid every month for your home instead of making a monthly payment for the mortgage on it. To be eligible for this type of mortgage, you must be aged 62 or older. The home must be your primary residence, and you must have enough home equity to cover the loan. Your property taxes and homeowners' insurance must be current. There are also a few HUD financial guidelines that you must meet.
For those who have built equity over the years and need to get some of their money out of the home for medical bills or other expenses, this allows you to remain in your home and still have access to that money. This type of mortgage is a loan, but it does not have to be paid back until the home is vacated or sold.
If any of these mortgage types would help you to get or stay in the home you want, contact us at Key City Lending to find the best mortgage for your needs.