solution when you need to find a property to buy or a house to acquire
but don’t have the total amount of cash at hand. It is a loan arrangement
that helps you stretch your money and enable you to buy the dream house
that you wanted to have. For many of us, buying a home is by far the
biggest financial investment they can ever make in their entire life. Considering
the fact that most of us are not capable of buying a house in cold cash,
obtaining a home mortgage loan from a banking institution or from a
renowned private lending firm would be the hope of last resort for many
people and their families alike.
There is a manifold of available home mortgage arrangements out there,
and if you are among the inexperienced homebuyers you have a tendency
to become overwhelmed by them. This is true most especially when you
realize that you are going to have a financial responsibility and decades-long
commitment to pay off your loan. What I am trying to illustrate here now
are the different types of mortgage loans currently available to home and
property buyers in the hope that by educating them on this subject, they’d
be able to come up with good and wise decision when it comes to purchasing
their first home ever.
The most commonly heard mortgage loans are adjustable rate mortgages, fixed
rate mortgages, conventional mortgage loans, and government-insured loans.
As the name of the loan arrangement itself suggests, fixed rate mortgage is
a loan program whose interest rates remain exactly the same for the entire
lifespan of the loan. It is not bound to change and will never be influenced by
external factors. This means to say that when you availed this type of mortgage
arrangement when buying a home, you are bound to pay the same amount
of money each and every month, year after year. This kind of loan programs
usually come to us in 15 years to 30-year loan terms. If you availed a 15-year
loan term, expect that you will have a slightly higher monthly payment as
compared to a 30-year loan term. This is normal so that you’d be able to
complete paying off your loan in less time.
As for the ARMs or the adjustable rate mortgages, these are the types of home
mortgage loans that can be best described as in flux in relation to the prevailing
conditions in the property market. There are also ARM loans that are bound to
remain fixed for a certain number of years first and then they would switch
to becoming an adjustable rate. But there are ARMs that initially would carry
adjustable rates for, say a few years, and then, later on, switch to become
fixed rate. These are referred to as hybrid ARMs, and there is nothing unusual
in the way they work but if you are unfamiliar with it you can easily get disoriented
or confused. So it is indeed better to learn about them earlier before you even
begin to have a need for it.
The most distinct characteristic of a conventional loan is that it is not backed,
promoted, or supported by the Canadian government. Government-insured loans
are those loan arrangements that have received support from the government
itself. This helps ensure that the lender is protected from borrower default. FHA
loans, VA loans, RHS loans are typical examples of government-insured loans.
In the US, they have a VA loan and is solely offered by the Veterans Affairs of the
US Department. It is usually offered to and obtained by the former and even
current military service members together with the members of their families. What
sets this type of loan distinct from many others is the fact that borrowers can
receive their loaned amount in full, which means to say that they don’t need
to make a down payment.
Self-employed professionals, traders, business entities, service providers, and
manufacturers can also take advantage of mortgage loan arrangement for their
loan requirements. Parties interest to obtain a mortgage loan need to provide
a proof of income, proof of address, and proof of identity. Furthermore, anticipate
beforehand that you may be necessitated to submit documents of the property
itself and see to it also that prior to making an agreement to purchase the said
property you are given a certificate that it is indeed insured from common hazards
like fire and mold. If your case is a jointly held property, your co-owners will have to
work with you on making the loan application and have them as co-applicants.
If you happen to have a very satisfactory credit score, you can easily have your
Toronto mortgage loan processed in no time.
