Miami real estate news and information

Loan Type / Rate Types…Insider Tips to Financing a Home in Miami

There are many kinds of loans out there, and it’s good to know what you’re getting yourself into before you start shopping around.

Fixed Rate (Traditional) Loan:  These kinds of loans usually offer repayment terms of 15, 20 or 30 years. The lender agrees to charge a fixed interest rate over the life of the loan. With this type of loan, your monthly mortgage payments will remain the same for the duration of the term of the loam.

fixed-interestAdjustable-Rate Loans (ARMs): ARMs, also known as variable rate loans often offer a great rate for the initial period of the loan. The introductory interest rate is typically lower than the rates offered for fixed rate mortgages. The interest rate will fluctuate over the life of the loan based on market conditions. Changes in interest rates happen at certain time periods and the lender is able to set both a minimum and maximum rate of fluctuation.

Federal Houseing Administration (FHA) Loans: These loans are usually made by private lending institutions like mortgage companies, banks or savings & loans, to eligible borrowers for the purchase of their new home. To secure the loan, a borrower must apply and qualify with a certified FHA lender. The eligible borrowers must also be able to pay a minimum of 3.5% of a home’s purchase price. If the loan is approved, FHA will insure a part of the loan’s value to the lender.

Veteran’s Administration (VA) Guaranteed Loans: VA Home loans are available only to qualified Veterans and their spouses. Private lending institutions issue the loans which are then guaranteed by the Veteran’s Administration. There is no required downpayment and it allows the borrower to receive a competitive, fixed rate.

Points:  A lender or borker can charge you points on your mortgage, where 1 point equals 1 % of the loan amount. There are fees paid to the broker or lender that are often linked to the interest rate and usually paid in cash to the broker or lender at the closing table. A lender may offer a lower interest rate but charge more points, so be sure to compare offers.

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