Understanding Realty
How to Shop for Low, Interest Only Mortgages
Where do you find low interest, interest only mortgages? Almost
every store on the street offers these types of mortgage products,
but who is the best, and who is the lowest? That’s going to take
some work on your part, and maybe just a little luck.
What kind of information will you need in order to shop for and
secure a great interest only mortgage, with a great low interest?
Well, you’re definitely going to need a good credit rating, proof of
income, an appraisal on the property, and a little bit of luck.
There are several products out there in the interest only mortgage
segment of the market, and a few are actually going to have a pretty
low interest rate tied to them.
For example, the 3/1 ARM, or the 5/1 ARM, these mortgages should
have great interest rates, and if you have great credit, you should
be able to find financing to suit your budget, your desire for a low
interest rate, and an interest only mortgage that you can live with.
These types of adjustable rate mortgages offer the interest only
feature for a very limited time, and this is what the average
consumer should discipline him or herself to use for financing.
Extending the interest only option out past these years, could put
the consumer in a dire position, should the real estate market take
a downward turn, they’re going to be left with a huge mortgage, and
property that is no longer worth the original mortgage amount. Now,
that’s not likely to happen since the value of the average home in
America has seen a steady 5 to 6% growth for the last 10 years. But,
it could happen. Take a look at the stock market after the
tremendous growth spurt of the late nineties.
Other variables in your quest for a low interest rate will be
determined by the type of lending institution you choose, the
determination of any government program eligibility, and your
geographical location.
Banks are traditionally a little higher with their down payment
requirements, but their interest rates are usually lower than those
of a mortgage company. The exception: online mortgage lending.
Thanks to the fact that this is an area of growth that everyone and
every company are promoting, they’re striving to compete with even
the lowest interest rate lenders, in order to grow their market.
What kinds of government approved mortgage loan programs are
available for the low interest-only mortgage shopper today? There
are actually more programs available today than any other time in
recorded mortgage history; and the ability to qualify for these
programs is at an all-time high. Fannie Mae, or the Federal National
Mortgage Association and Freddie Mac set guidelines and product
availability for homeowners and residents that quality for low- to
moderate income based mortgages. They also offer low-interest only
mortgages in order to accommodate an ever broadening market. The
graduated payment mortgage is an option for FHA homeowners who
currently have low to moderate incomes but expect them to increase
substantially over the next few years; this can be compared to a
balloon note or the interest only products in use today.
Your location will play a key role in your ability to obtain the
lowest interest rate using the interest-only mortgage option, also.
Prospective homeowners looking to purchase a home in a high end,
resort area will, of course, have more choices available, as there
are more buyers and sellers competing, as well as lenders for
business. The other geographical contributing factor is the real
estate market in your area. If the market is great, prices are not
suppressed, and there is moderate movement in the buy and sell
market, it increases your chances of obtaining the low interest rate
you’re seeking.
The interest only mortgage product and a low interest rate are
not mutually exclusive. They can be paired, and under the right
circumstances produce a winning mortgage product for the right
consumers. The route to achieving this goal will take education on
the part of the consumer, hard work, and a little luck in locating
the right mortgage lender.
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