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VA Home Loan
There are several reasons to look into VA home loans:
- No down payment in most cases
- No prepayment penalties
- Limited closing costs
- Low fixed interest rates
- No monthly mortgage premiums
- A borrowing maximum as high as $240,000
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Buy a House
There are several options to look into if you are interested in buying a home
and several loans available to help you in this process:
- If you would like to have your new home built so that you can customize
it to your tastes, there are construction loans that pay for materials, land
and labor necessary to construct your house. Repayment of this loan would
not be necessary until the construction period ended and you were able to
move into your brand new house.
- For families with lower incomes who may not be able to provide a large down
payment, FHA loans are available. FHA loans are insured by the Federal Housing
Administration but funded by a conventional lender, and limits the amount
of risk to the lender. This lack of risk is transferred to you through lower
down payments and lower interest rates. VA loans are much the same. They are
provided by conventional lenders but insured by the Veterans Administration.
A VA insured loan requires no down payment at all and has a very low interest
rate. Visit the Department of Housing and Urban Development website (www.hud.gov)
to find out more about federally insured and funded home loans.
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Home Equity Lanes
Another option is a reverse mortgage. Reverse mortgages are available to homeowners of 62 years and older. These lanes do not involve monthly payments and are based on the value of the home and not income. The lane can be given in three different ways: an immediate cash advance, a monthly advance, or a credit line, which remains open until used up. These forms can also be used in combination.
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Land Loan
Land loans, unlike mortgage loans, are provided solely for the purpose of acquiring land on which to build a new home. Land is a finite quantity anywhere you go and in today’s world it is at a premium because there is only so much to go around. Finding an appropriate lot for a home can be on the level of difficulty of finding an affordable loan for land. Financing can also be more difficult if the borrower intends to wait for more than a few months to build on the property because it adds to the perceived risk if the lot turns out to not be suitable for the building without major work done on the land.
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Mortgage Calculation
Amortization is the repayment schedule for both the principal and interest of your mortgage which is usually made by equal payments on a monthly basis.. Mortgage calculation shows what this monthly payment will be, depending on certain loan terms, including, loan amount, interest rate, and term. If your loan term is 15 years, your interest rate is 7%, and your loan amount is $150,000, your monthly payment comes to $1,348. Mortgage calculation can also show you that your total interest paid of the life of this loan would be $92,683. Some people would look at these figures and decide that $1,348 is too high a monthly payment that will not fit into the budget. In this case, you could change around the terms, for example, switch to a 30 year term, which would drop the monthly payment by $351, making it $997 monthly, but would double the amount of interest paid over the life of the loan.
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Mortgages Online
Other basic but important terms to understand are:
- Principal is the amount borrowed (on which interest acts) which is repaid
monthly
- Amortization is the process of repaying the amount borrowed through monthly
payments of principal and interest.
- Negative amortization is when the monthly payment is not high to adequately
pay the loan off. In this case interest builds too quickly and the principal
grows instead of decreasing. This can occur because of lender scams or because
of monthly payment caps.
- Equity is the value of your house left over after subtracting the total
of your mortgage. If your house has a market value of $130,000 and a mortgage
of $100,000, the equity is $30,000.
- An index is used to determine the rate on an adjustable rate loan. For some
loans this rate may be the Prime Rate or the average rate of a one year Government
Treasury Security.
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Reverse Mortgage
Like FHA loans, there is a federally insured reverse mortgage. The Home Equity Conversion Mortgage, also known as HECM. To qualify for a federally insure reverse mortgage, a borrower must own a single-family unit, a 2-4 unit building or another federally approved unit.
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