There are two kinds of mortgages, fixed-rate and adjustable-rate mortgage (ARM). Every mortgage kind has its highs and lows.

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What is a Fixed Mortgage?

A fixed mortgage has an interest rate that remains the same for good. Fixed mortgages are the most common kind of financing because they provide predictability and stability — I’ll never be surprised by the principal and interest charges in my monthly mortgage payment because they’ll stay the same for the entire loan term.

Fixed rate mortgage highs and lows

• High: This loan kind has predictable payments that may allow for smoother budgeting.
• Low: The loan seems to be easy to understand and may be feasible for first-time buyers.
• Low: I may pay more interest over the life of the loan.
• Con: I have to refinance to get a lesser interest rate, which can be expensive.

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What is an Adjustable Mortgage?

Commonly referred to as an ARM, rates and monthly payments remain the same for a set period of time, then evolve periodically. For example, a 5/1 ARM locks in the rate for the first five years, then the rate will fluctuate once per year. The rate will either increase or decrease depending on rate trends in the US.

Adjustable Mortgages Highs and Lows

• High: The initial interest rate may be lesser than on fixed rate mortgages.
• Lows: The loan can be customized to individual borrowers.
•  Interest rate on the loan may increase substantially.
• Loan could seem more difficult than a fixed mortgage.
• Loan payment may change so I may not have fixed monthly payment amounts.
• I may be have to pay more interest over the life of the loan, depending on how adjustable rates change over time.

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I hope you have a better understanding of which option to go for a fixed mortgage or an adjustable mortgage. Additionally, which mortgage calculator do you use specifically? Would you like to share with the IBA family?

These new mortgage programs exist to serve very special, and innovative circumstances. Most of the home purchases do not likely fall into one of these 3 categories. But for the people who need easy and new mortgage programs in tough situations, these new mortgage programs can be an added benefit.

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Niche Mortgage Programs That I’m Unaware Of

Most people know about the basic type of home loans or mortgage loans. This is where an individual or married couple pays a little bit of upfront money, sign a few papers, and shift into the home as their new residence. However, there are few other ways to purchase a home that is not as common nor as well known. Listed below are some of the new mortgage programs that I did not know existed.

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Family Opportunity Loan

The Family Opportunity Loan enables me to purchase a home as an owner-occupied residence, even though I don’t plan to reside in it. That means, as a child of elderly parents, I can supply better housing for them and obtain the same rates, fees, and lending flexibility as if I were purchasing my own home to reside in.

VA Loan Entitlement

VA loan entitlement is an advantage provided to militants and their families to help them purchase a home. The VA loan entitlement is a guaranteed amount that the VA will cover if I default on the loan. This guaranteed backing provides a lender with a level of insurance that is not a part of other types of home loans. As such, I’m able to qualify for much better terms by using a VA loan, such as no down payment, lower interest, and zero private mortgage insurance.

There are a few common misconceptions about what a VA entitlement is. Few people assume that it is how much I can borrow in total or how much the VA pays out to the borrower to then use towards their VA loan. However, it is neither. The VA loan entitlement is the amount of money the Department of Veteran Affairs will guarantee on a VA home loan, without a down payment. 

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Bank Statement Loan

A bank statement loan is a mortgage for which the underwriter uses the borrower’s bank statements to verify and assess income. The bank statements given with the loan application must be consecutive and cover the 12 to 24 months instantly prior to the application.

Now,For which new mortgage programs you will apply for?

These are the top 3  new mortgage programs that I may not have heard about in the recent past. They are distinct in the fact that each mortgage program may apply to a very different situation. But they also present an option for people to purchase a home that is not a traditional type of transaction.