The Adjustable Rate Mortgage loan is an excellent mortgage program that can be of significant help to those mortgage borrowers who know exactly how the program works. The ARM loan is quite complicated and works in a different way than one would normally encounter with a conventional fixed rate mortgage loan.
This is the reason why for a borrower who is not familiar with the Adjustable Rate Mortgage scheme; it is very easy for such a borrower to fall into mortgage default and subsequently owe more on the home loan than the value of his or her home.
Adjustable Rate Mortgages, also known as ARM loans, are an alternative to fixed rate mortgages. When you buy a home, the format of your interest rate is one of the primary decisions you will have to make. There are benefits and drawbacks to both setups.
The first benefit of adjustable rate mortgages is that you do get a lower interest rate in the beginning. The second benefit is that for some initial time period, this rate is usually fixed.
The adjustable rate mortgage is a loan with an interest rate that adjusts at set intervals. The frequency at which the adjustable rate mortgage adjusts, depends on the borrowers choice during financing.
There are many different adjustable rate mortgage products available with 3/1, 5/1, 7/1 being the most common. The first number in loan program is for how many years the interest rate remains fixed.
The second number is for how often the rate will adjust after the fixed period ends.
Cash out refinancing is where you extract the equity from your home, liquidating it as cash through a second loan.
Sometimes people use this cash to pay off their mortgage, but more often “cash out” refinancing refers to extracting this cash for other purposes like medical bills, vacations, home improvements, tuition, and so on.
Are you thinking about cash out refinancing? If so, you should look at the pros and cons before you commit to the prospect.
A bridge loan, also known as a swing loan or a caveat loan, is a type of loan which is taken out for a short time frame and is used as a “bridge” to more substantial and permanent financing.
Bridge loans can be used on all types of projects and also on real estate purchases. A lot of people confuse bridge loans with hard money loans.
They do overlap, but they aren’t the same thing. Bridge loans are short-term hard money loans which are used for a specific purpose—allowing you to complete a purchase or another project while long term funding is still pending.
If you’ve been paying off on your home for a long time and you’re in a pinch with your mortgage or another bill, you might be able to use cash out refinancing in order to handle the problem.
Cash out refinancing isn’t available to everyone in all situations, but sometimes it can come to your rescue. With cash out refinancing, the money which you’ve put into your home can be liquidated and returned to you in the form of a loan, which you can then use to pay for other things unrelated to your home.
When you’re in the market for a mortgage on a new house, odds are you’re looking at a conforming loan.
A conforming loan is any loan which conforms to the guidelines set by Fannie Mae and Freddie Mac, the government-sponsored corporations which set standards for residential mortgage loans. Most loans are conforming loans.
Loans which do not conform to these standards are called non-conforming loans. If you’ve ever heard of a jumbo loan, that is an example of a non-conforming mortgage loan which exceeds loan limits set by Fannie Mae and Freddie Mac.
When you’re trying to buy a home for the first time, you will probably hear about FHA loans and conventional loans. FHA first-time home-buyer loans are a great way to buy your first house, even if you don’t have perfect credit or enough money to furnish a large down payment (or any down payment at all in some cases).
Typically banks are skittish about loaning to people whom they perceive as posing a high risk—like first-time buyers in these situations. Nonetheless, even getting an FHA loan can be a challenge. The alternative to FHA loans are conventional loans.
Not everyone fits the cookie-cutter model of perfection expected by the majority of lenders—in fact, many people don’t fit that model at all, in spite of being decent, hardworking and reliable.
Even if you do have great credit and you look like a good investment, if the home you want to build or buy doesn’t fit the cookie-cutter model of a “normal” investment, a lender may refuse to finance you.
If for whatever reason you are unable to procure a normal loan, you may want to look into hard money loans.