When you don't work in the mortgage industry the jargon used is not familiar and a bit overwhelming. Mortgages are complicated; buying a home is complex. The entire process is intricate and involves a basic understanding of what you should be looking for. Below you will find a few essential descriptions to better help you throughout the processes of procuring a new home loan.
Interest Only Mortgage Options
A mortgage that is an interest only mortgage is meant to decrease the monthly payment over the first few years of the loan. This option allows homeowners to pay only on the interest of the mortgage without making any payments to the principle. This option can be a bit risky. You are not paying anything on the principle of the loan which leads to a lower payment because you are only making payments on the interest that is accruing.
Eventually though homeowners will be required to begin making payments on both the principle of the loan and the interest. This option will lead to a higher monthly payment at a specific date set forth in the terms of your mortgage. It is important to be sure that when it is required that you are able to afford both the interest payment and the principle payment. An interest only loan option is often used when homeowners have purchased a home that is need of some work. Homeowners can use the money that would normally be going towards the monthly principle payment on renovations to the home.
Reverse Mortgage Funding
A reverse mortgage is an option that exists to aid homeowners needing extra funds when their homes are fully paid for. When you take advantage of a reverse mortgage you receive a monthly stipend from the equity within the home. This option is usually left for elderly homeowners whom have had time to pay off their mortgages and see an increase in equity within their homes. This option gives homeowners extra money as they age in place in their own homes. This is an option many older homeowners choose to leave liquid funds available upon their passing. A reverse mortgage can be set up to pay closing costs and realtor fees upon the sale of the home. When the homeowner passes the house will be placed for sale thus alleviating the burden that selling the home can cause to heirs.
To find out more about mortgage options that best meet your unique situation contact a local mortgage broker. Meeting and discussing your unique situation with a mortgage advisor is a sure way to find a mortgage option that meets your need.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.