Do you have big plans to buy a new home in New York but feel apprehensive because you do not know much about the in’s and out’s of mortgage loans in New York? Fret not as we have compiled a cheat sheet to help you learn about the different types of NY mortgage loans. It will give you a basic rundown so that you can feel confident to take out your first home mortgage in New York.
A balloon mortgage loan requires borrowers to commit to making regular payments over specific intervals. The borrowers are then required to shell out the remaining sum within a short time. The advantage of this type of loan is that the interest is relatively low. There are balloon mortgage loans that require interest-only for 10 years. One of the cons of this loan type is the significant lump sum payment that borrowers need to deal with when the loan has matured.
Reverse mortgage loans only apply to homeowners who are 62 years or older. This type of mortgage loan enables borrowers to convert their home’s equity into cash that can be used for things such as their retirement. Other important things to know about this Baby-Boomer type of mortgage is that it requires payments for home insurance and property tax; and the mortgage for the property gets paid back in full to the lender when the homeowner sells their home or passes on.
Federal Houses Administration Loan
Also known as a FHA loan, a Federal Houses Administration Loan is designed to help the Federal Housing Finance Agency reduce risk of loss when a borrower defaults on his or her payments. Due to the requirement of a low down payment and leniency on the borrower’s credit score, FHA loans are one of the easiest types of mortgage loans to seek approval in New York.
Fixed- and Adjustable-Rate Mortgage
Fixed-rate mortgage loans have locked interest rates for an initial period, and that could mean anything from a year to a decade. It is a means of ensuring that one’s mortgage payment will not change over a specific period of time. Adjustable-rate mortgages, or ARM, are the opposite of the aforementioned; meaning that the interest rates are adjusted periodically to reflect market conditions.
An interest-only mortgage loan involves a home buyer paying off the interest from the principal of the loan. Oftentimes, the loan payments are fairly low and are manageable for first-time home buyers. You should keep in mind that the low payments do not apply forever and you will be responsible for the remainder of the loan. When the time comes, you can choose to enter a standard mortgage to start paying back the entire loan or renew the interest-only mortgage.
VA loans can be applied by former and present US military personnel and their families. Although the Department of Veterans Affairs do not lend money specifically for VA loans, it does back loans provided by private lenders such as mortgage providers or banking companies to veterans who qualify.
We hope that this quick overview of the different types of mortgage loans in New York help you hit the ground running as you kick start your mortgage process. When you work with a trusted NY real estate brokerage firm, you can easily obtain the latest mortgage information and get expert help from agents when you spot your dream home among the latest real estate listings.