The Type of Home Loan

Lenders have access to mountains of information about different types of home loans and the tendencies of borrowers to repay under different circumstances. They use this to calculate the risk that a home loan might not be paid back. They also use data to know which kinds of loans they can be more flexible with, giving borrowers options that may make it easier to get a loan.

An adjustable rate mortgage (ARM) is a good example. It is easier to get approved for an ARM than a Fixed Rate loan. Because the initial interest rate and monthly payments are both typically lower on an ARM, your ability to repay the loan in the first year or years is easier.

Knowing the difference between the types of mortgages can make a big difference in your final decision. A fixed rate mortgage may have a higher rate than an ARM, but the rate will not increase. This may be a better option if you plan to own your home for more than five years or want the reliability of a fixed payment. On the other hand, since a fixed rate loan may initially be more expensive, an ARM could save you money if you plan on staying in your home or loan for just a few years.

Another option is a combination rate mortgage that combines both adjustable rate and fixed rate periods in one loan. You can get the best of both worlds with a lower initial rate and fixed initial monthly payments.

Things You Can Do To Learn About Loans:

Learn About Home Loans. Each type of loan has advantages and disadvantages. Loans that are easier to qualify for may not always be the best deal in the long run. You need to weigh their different benefits based on your financial situation. And, once you have a home loan, it’s wise to seek a “mortgage check-up” from a professional Loan Consultant on an annual basis. Your needs and the mortgage market change continuously, so it’s good to be willing to change mortgages, too.

Call one of Countrywide’s Home Loan Consultants at 1-800-909-8217 for a FREE no-obligation home loan consultation. They are experts in helping you find the right loan for your needs.