Mortgage Types - Baja Properties

Tuesday, 25 September 2007

BAJA REAL ESTATE - Financing for Northern Baja Real Estate for Sale doesn't have to be complicated. Since some mortgage options are less conservative than others, it's important to determine if you are a risk taker or if you prefer more stability in your financial dealings. Do you invest in the stock market? Or do you put your money into certificates of deposit? Your answers to these and other questions that may be asked by your lender will help you to choose the mortgage that is right for you, while you look at Rosarito real estate for sale. Do you always know your bank balance? Are you comfortable with a high level of uncertainty? There are many different ways to finance a Baja home. This table describes some of the options you should discuss with your real estate sales professional and the lender you select. How It Works Benefits Disadvantages When to Consider Fixed-Rate Mortgage Borrower and lender agree upon an interest rate and corresponding principal and interest payment. They remain constant throughout the life of the loan. Stable and predictable Makes budgeting for the future easy Protects borrower from rising interest rates Interest rates are higher than initial interest rates for other types of loans Doesn�t benefit you when interest rates fall You prefer not to take risks You plan to stay in your home for more than 5-7 years Adjustable-Rate Mortgage (ARM) Borrower and lender agree on an initial interest rate that will change periodically, usually in relation to a specific index. Payments rise and fall accordingly. Interest rates are generally lower than fixed-rate mortgages at the beginning of the loan If interest rates fall, your payments go down Borrower takes the risk on the rise and fall of interest rates Future payments are unpredictable Interest rates are high You plan to keep the home for a short time You expect an increase to your income Balloon Mortgage Starts out as a typical fixed-rate mortgage but has a shorter mortgage term, usually 5-7 years, and requires borrower to pay off the balance at the end of the term. Interest rates and monthly payments are lower than for traditional fixed-rate mortgages Predictable payments for term of loan May require refinancing at whatever rates are available at the end of the loan term, if borrower chooses to keep the home Unpredictable situation after loan ends You plan to keep the home for a short time Government Loans Through various lenders, the Federal Housing Administration (FHA) and Veterans Administration (VA) offer opportunities for many Americans. Often allows for a lower down payment than traditional bank loans Insured by the government Limited to properties designated as approved for government loans You are a veteran�VA Loan You are buying a lower-priced home with a small down payment Convertible ARM Starts out as a typical ARM but provides an option to lock in a fixed rate without refinancing. The option is made available after a set time. Initial Interest rate is generally lower than fixed-rate mortgages Locked-in, predictable payments after conversion Borrower takes the risk on the rise and fall of interest rates for at least the initial period of time Interest rates are high