(6) Types Of Loans & Rates
It is one of the best factors to know before applying for mortgage. There are mainly 3 types of loan depending on rate of interest: Fixed-Rate Mortgage (FRM) with same interest rate, Adjustable-Rate Mortgage (ARM) with changing interest rate and Interest Only-Jumbo Loan allows option of paying only interest for first few years.
Interest rate on your mortgage loan is dependent on number of factors such as current market conditions, state of the economy, as well as your credit profile.
Lenders may also charge for Points along with interest to cover their cost. You are advised to negotiate for them.
(7) Mortgage Insurance
It is one of the key factors to know before applying for mortgage or home equity loan. If you are making less than 20% down payment for your mortgage than you have to pay mortgage insurance to protect lenders in case of loan default.
Mortgage insurance premiums may vary depending on the credit score and size of down payment.
However, you can avoid this extra cost of mortgage insurance by just making higher down payment, paying a high rate of interest, or agreeing to a second mortgage.
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