If you’re looking to buy a Northern Virginia home but don’t have enough savings to purchase it in cash, you can always apply for a residential mortgage.
What is a Residential Mortgage?
A residential mortgage is a common legal agreement in which an individual borrows money from a bank or person to buy property such as a house or a condominium. A mortgage agreement usually states that the borrower must repay the borrowed money and any interest to the lender on a predetermined schedule. Should the borrower fail to pay per the contractual schedule, the lender has a legal right to take possession of or foreclose on the property, which is the security for the loan.
Below are the different loan types that you might want to check out:
Fixed-rate mortgages are the safest bet if you always want to know what you owe. Generally repaid over a period of 15, 20 or 30 years, the interest rate and monthly payments of principal and interest for fixed-rate mortgages are locked in for the duration of the loan.
Adjustable-Rate Mortgage (ARM)
Adjustable rate mortgages are designed to adjust to match the market after an initial fixed rate period. ARM loans can be appealing because they are often packaged with low initial rates, but once the rates adjust they can potentially cause dramatic and unpredictable swings in mortgage payments that are difficult to budget for.
If you expect your income to improve over time and are hopeful on the real estate market, interest-only loans can be a good option. In the first five or ten-year period of the loan, the borrower only pays interest – no principal – meaning a smaller overall mortgage payment. At the end of the interest-only period, either a balloon payment for the balance of the mortgage principal may be due or the payments may increase to pay off the principal within the remaining period of the loan.
Private financing can be a great alternative for people who have been through bankruptcy, foreclosure, or other financial troubles and are looking to buy a house. This is a financing method where a company or individual person may provide a mortgage loan to a non-conforming residential buyer who does not qualify for a bank loan. These typically are considered high risk and therefore are likely to carry higher interest rates especially if the loans are high-risk. They are also largely unregulated.
Only available to eligible service members who meet specific requirements, home loans from the Department of Veterans Affairs are popular among those who qualify as they require no down payment. Additionally, there are limits on lender fees such as closing, origination and appraisal fees. No private mortgage insurance (PMI) is required to secure VA loans, even if service members opt not to provide a down payment.
The Federal Housing Administration, a division of HUD, insures some types of loans to make homeownership more accessible through lower down payments and closing costs along with more flexible credit requirements. If you are buying a first home, you may be eligible for an FHA insured loan. The FHA also provides reverse mortgages for senior citizens who have paid off most of their mortgage and want to turn their home equity into cash for living expenses.
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Sean Blanchette(703) 371-5710 Sean@FrontDoorHomes.comDownload my Mobile App ~ Text KWJRGEI to 87778 Now!
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