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Refinansiering: Types of Mortgages

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There are various kinds of mortgage debentures. Though most individuals simply think of mortgages as the debenture used to purchase a house, the reality is any kind of debenture secured by house equity. These things come in different types and can be structured in various ways.

A thirty-year fixed-rate debenture is the most popular kind of mortgage for purchasing a house. A fifteen-year credit is usually used to refinance loans individuals have been paying for a couple of years. A 7-1 or 5-1 adjustable-rate mortgage or ARM may be an excellent choice for people who expect to move to another house in a couple of years.

Choosing the right kind of credit depends on the type of borrower and what they are looking to do. With its softer credit requirements and very low down payments, a Federal Housing Admin loan can be an excellent type of debenture for first-time property buyers or people with a bad or flawed credit history or rating.

On the other hand, individuals with strong credit histories may get better deals with conventional mortgages backed by financial institutions like Freddie Mac or Fannie Mae. A property equity debenture is a kind of mortgage used to borrow money by using the property equity as collateral.

But HELOC or Home Equity Line of Credit may offer excellent flexibility. Cash-out refinancing may be a good choice if borrowers need a large amount of money or can minimize their interest rate in the process. So what kind of mortgage debenture is the best one for people and their purposes?

To help individuals sort through their options, this article will provide a breakdown of various credit debenture options, their descriptions, how these things are used, their advantages and disadvantages, as well as the kinds of borrowers they may not or may be suited for. Note that a single type of mortgage may have more than one feature or be pretty useful for different purposes.To find out more about this subject, click sites like norskrefinansiering.com/to find out more.

Refinansiering: Types of Mortgages

Descriptions and uses

Thirty-year fixed-rate

  • Long-term housing loan designed to be paid off in thirty years at a set IR (interest rate)
  • House purchase, cash-out refi, mortgage refi, HEL or Home Equity Loan, Federal Housing Admin, Veterans Affairs, United States Department of Agriculture, and jumbo loans

Fifteen to twenty-year fixed-rate

  • A medium-term housing loan designed to be paid off in fifteen to twenty years at a set IR
  • House purchase, cash-out refi, mortgage refi, HEL or Home Equity Loan, Federal Housing Admin, Veterans Affairs, United States Department of Agriculture, and jumbo loans

Adjustable-rate home debenture

  • Loans with IR that differ over time, depending on market conditions
  • House purchase, cash-out refi, mortgage refi, HELOC or Home Equity Line of Credit, Interest-only debentures, jumbo housing credits

Interest-only

  • Interest payments only for fixed periods before principals need to be paid off
  • Balloon payments, ARMs, jumbo credits, HELOCs, property construction debentures

Piggyback credits

  • Second-home credits, or liens, are used to offset part of the purchase price of houses
  • Partial or the full down payment to avoid paying for insurances; funding jumbo portions of high-end property purchases so that the credit can be covered with lower-rate conforming loans. ARMs, fixed-rates, jumbo credits

HELs or Home Equity Loans

  • Credits are secured by the property’s equity; the house serves as collateral for the debenture. A type of lien or second credit
  • Borrowing funds for any purpose desired by the property owner, usually home improvement projects or other significant expenses. ARM, fixed-rates, interest-only, and balloon payments

HELOC or Home Equity Line of Credit

  • It is a kind of HEL in which borrowers have pre-set limits, they can borrow against if needed. Usually, it is divided into draw periods, during which people can borrow funds, followed by repayment periods.
  • Borrowing funds at irregular intervals for the purposes set by borrowers
  • Draw periods are usually interest-only ARMs
  • Repayment usually fixed-rate loans

Reverse Mortgage

  • A category of HELs for people age sixty-two years old and above
  • Monthly stipends to supplement income during retirement
  • Monthly cash advances for limited periods
  • HELOCs to draw if needed

Refinancing

  • Taking out new mortgages to pay and replace existing ones
  • Getting more desirable debenture terms compared to current offers like lower IRs, lower monthly amortizations, longer or shorter payoff terms, Fixed-rate credits, adjustable rates, or vice versa

Cash-out refi

  • Single transactions to both refi current credits and borrow funds against available property equities
  • Borrowing funds for the purposes desired by the property owners, in addition to other possible uses of refi
  • ARM or Fixed-rate

Home Affordable Refinance Programs

  • Federally-backed schemes to help property owners with negative- and low equity mortgage refi options for more favorable terms
  • Refinancing primary loans
  • Thirty-year, fifteen-year, twenty-year, fixed-rate options

Federal Housing Admin loan

  • Federal schemes designed to help home ownership
  • Refi, house purchases, cash-out refi, and house improvement credits
  • Thirty-year, fifteen-year fixed-rate, HELOCs, ARMs