West
Virginia Real Estate Mortgage Loan
If you are a first time home buyer or have purchased
many homes, the type of mortgage you select is very
important in the State of West Virginia.
A mortgage is a document signed by a borrower when
a home loan is made that gives the lender the right
to take possession of the property if the borrower fails
to pay off the loan. Below are the many types of mortgage
loans available to the home buying consumer. There are
many types of home mortgage loans within West Virginia
to select from with lots of different offers and home
mortgage loan application decisions. In the past almost
everyone applied for a 25, 29 or 30-year fixed interest
rate home mortgage loan, the most common being a 30
year mortgage. Now, there are so many different options
well targeted toward borrowers and individuals within
West Virginia, in different financial situations within
the state of West Virginia.
ARM (Adjustable Rate Mortgage
Loans)
If you think you are only going to be living in your
home for a few years an Adjustable Rate Mortgage is
the best. An adjustable rate mortgage is also referred
to by the acronym "ARM". ARMS's have a set
interest rate and steady monthly payment for a number
of years. The mortgage loan payment is usually based
on the amount to payoff the entire mortgage balance
at the end of the term, which is usually 30 yrs.
The most common types of ARMS are 1 yr, 3/1 yr, 5/1
yr and 7/1 yr ARM, After the initial period is over,
the rate and term of the mortgage will be adjusted annually
to current market mortgage rate if you do not refinance
the loan. Most ARMs have caps on how much the interest
rate may increase after the loan expires. ARMS are very
popular because the rates are usually about 2-3% lower
that a fixed rate which means lower payments. The less
number of years usually means the lower interest rate.
A 1 yr ARM will have a lower interest rate than a 5/1
year term. ARM.
Fixed Rate Mortgage Loan
If you know that you are going to be in the house for
a number of years then a fixed rate mortgage is best.
A fixed rate mortgage is the most common home finance
method and usually are 15 yr or 30 yr mortgage loan.
A fixed rate mortgage loan is good if you know you will
be living in your home for a long time and you don't
have to worry about your payment ever increasing. Monthly
loan payments will be the same for the entire life of
the loan. The first payment will be the same as the
last payment.
If home mortgage interest rates increase you have an
advantage because your loan interest rate is locked-in
at a lower rate which means your mortgage loan payment
will not increase. But alternatively if interest rates
drop your rate will not go down unless you refinance
your mortgage. Rates went up to 18% at one time and
as low as 4% recently so it is hard to tell what will
happen in the future.
A 15 year home mortgage will have a somewhat lower
interest rate but higher monthly payments than a 30
year fixed mortgage rate. The advantages to this type
of mortgage financing is that you will get more home-equity
by paying down the principal balance. You also will
have the loan paid off faster and will not have paid
as much total interest when the loan ends. It could
save you $100,000 or more in interest.
A 30 or 25 year year home mortgage loan will usually
have a higher interest rate than a 15 year and a lower
payment. This is a good type of loan to get if you are
short on money or cannot qualify for the higher mortgage
payment. If you start to make more money and want to
pay off the mortgage balance faster you can always set
up bi-weekly payments with your lender. You also can
just pay more money every month and apply it to the
principle balance. Mortgage lenders rarely impose a
penalty for this.
Interest-only mortgages
An interest only mortgage is where the borrower only
pays the interest on the loan each month. This means
property debt never declines. Many borrowers get this
type of loan because the rates are real low and the
payment is low. An interest-only mortgage may be good
if you expect to earn a lot more in a few years and
know you will be able to afford a higher mortgage payment
later on where you can always refi your loan. Some West
Virginia homeowners may choose interest only mortgages
because they are going to invest funds and make money
on the savings on the difference between an interest-only
mortgage and a regular amortizing house mortgage loan
with principle and interest.
You should always shop around for the best deal because
it could save you thousands. The lenders want your business
and their rates and terms are always negotiable. |
