Which Kind Of Home Mortgage Loan Is Right For You?
Home ownership is a clear marker of financial stability, but given the availability of home mortgage loans, the situation is not quite so simple that you can easily divide people into two categories, the haves who own real estate, and the have nots who will never be able to do so unless their fortunes undergo a major change. Qualifying for a home mortgage is not a yes and no question, but rather a question of which kind of mortgage you can qualify for. Unfortunately, the easiest mortgage loans to qualify for are not always the easiest ones to repay. If you are wondering whether a mortgage loan that seems tempting will turn out to be unaffordable, or if you are struggling to keep up with payments on an existing mortgage, contact a Jupiter foreclosure defense lawyer.
Conventional or Government-Backed?
If you have a steady but modest income and want to buy a relatively inexpensive real estate property, then government-backed mortgages are the ideal choice. The lenders of these kinds of mortgages are commercial banks, but the loans are insured by a federal agency, either the Federal Housing Administration (FHA), the United States Department of Agriculture (USDA), or the Department of Veterans’ Affairs.
The approval process for government-backed mortgages is rigorous, though, and not everyone qualifies. If you can’t get a government-backed mortgage, apply for a conventional one. The safest conventional mortgages are the so-called conforming ones, which means that they comply with the guidelines set by the Federal Home Finance Administration (FHFA) regarding how much you can borrow based on your credit score. Nonconforming mortgages are riskier.
Fixed or Adjustable Interest Rate?
Likewise, if you have a choice between a mortgage loan with a fixed interest rate or one with an adjustable rate, choose the fixed rate mortgage. With a fixed rate mortgage loan, your interest rates are guaranteed not to increase. If lower interest rates become available after you have already borrowed the loan, you may be able to refinance your mortgage.
With an adjustable-rate mortgage loan, the interest rate on your mortgage will stay the same for a set period of time (for example, three years). After that, it will increase or decrease according to market forces at regular intervals. With an adjustable-rate mortgage, there is always a risk that your monthly mortgage payments will become unaffordable if you are already living paycheck to paycheck. Even though people sometimes talk about adjustable-rate mortgages and balloon payment mortgages as the riskiest types of mortgage loans, the two terms are not interchangeable. No matter what kind of mortgage you have, the best way to avoid unaffordable payments is to pay more than the minimum payment each month, thereby reducing your principal and your interest.
Contact a South Florida Debt Lawyer About Avoiding Mortgage Foreclosure
A South Florida debt lawyer can help you develop a strategy to stay ahead of your mortgage payments, whether that involves aggressive debt repayment or additional borrowing. Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.