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Mortgage Options - An Overview

If you are considering a real estate purchase, among the first issues that will need to be addressed is financing. A wide variety of mortgage options are available in the financial market today, making it very necessary for consumers to educate themselves on the differences between them in order to secure the best possible loan for their circumstances.

Basic Home Mortgage Categories

Among the most popular home financing options is the traditional fixed rate mortgage, or FRM. This is the loan of choice in nearly 70 percent of home purchase transactions. The characteristic of fixed rate mortgages that makes them most appealing to many consumers is stability. The interest rate of this loan is locked in at origination and remains the same throughout the term of the loan, regardless of changes in the prevailing market rate. This allows the consumer to rely upon a stable monthly payment on the principle and interest throughout the term of the loan, whether it spans 30 years or 15.

Adjustable rate mortgages,or ARMs, are another option that has become quite popular in real estate transactions. These loans have an interest rate that is tied to an index, changing with prevailing market rates. Generally, certain intervals at which the interest rates are adjusted are specified in the loan contract.

If the prevailing market rate has increased from one adjustment period to the next, the monthly loan payments will rise. If interest rates have fallen, so too will the consumer’s payment. Often, there are caps placed on the amount that the rate can change during each adjustment period, and some carry a lifetime cap, limiting the amount rates can be increased over the term of the loan. Under the umbrella of the two main categoriesof home loans, fixed rate and adjustable, are a number of ariations, some of them combining characteristics of both. A few of the most common variations are outlined below.

Government Guaranteed Mortgage Loans

The FHA loan is a fixed rate mortgage that is designed especially for the first time home buyer of moderate or low income. Guaranteed by the Federal Housing Administration, these loans can be easier to qualify for than a traditional FRM and allow a smaller down payment than most other home loans, generally about 3 percent. Interest rate are usually lower than standard fixed rate loans, and programs are available for the purchase of single family homes or multi family ones, as long as they are to be owner occupied.

VA loans are another government guaranteed mortgage. To be eligible for a VA loan, one must have a history of active military service or be the surviving spouse of an active service member. Often,a veteran can obtain a VA loan with little or no down payment, but must demonstrate the ability to make monthly payments.

The USDA Rural Development Guaranteed Housing Loan is another government guaranteed home loan option. This type of home mortgage loan is provided to low and moderate income individuals who are purchasing a home in an area designated as a Rural Development eligible area. No down payment or mortgage insurance is required with this loan program, and qualification can be much easier your average home loan, allowing consumers with less than perfect credit to obtain financing for home purchases.

Option ARMs

Also referred to as flexible payment ARMs, Optiona adjustable rate loans have an interest rate that adjusts every month with no adjustment caps. These loans allow borrowers to make very low mortgage payments initially, but these monthly payments will rise over time, often quite steeply.

Balloon Mortgages

Balloon mortgages are structured with a payment schedule similar to that of a thirty year fixed rate loan, although the term of the balloon loan is shorter, most often spanning five to seven years. At the end of the loan term, the outstanding balance must be paid in one lump sum, either out of pocket or by refinancing the home.

Interest Only Mortgages

Interest only mortgages are loans that allow the borrower to pay only the interest on the loan for a predetermined period of time. The principle of the loan is not paid down during this period at all, leaving the homeowner monthly payment to meet over the short term. However, once this initial interest only period expires the payments increase to include repayment of the principle and are steeper than a standard loan, as the principle must be paid over a shorter time period. The longer the interest only period, the higher the payments will rise after its expiration.

Biweekly Mortgages

This a loan in which the borrower makes payments every two weeks instead of the typical monthly payment arrangement. The result of this practice is a lightly shorter repayment term. Paying biweekly results in 26 payments a year, which is quivalent to thirteen monthly payments, rather than the twelve payments made with a standard monthly mortgage payment.

Bimonthly Mortgages

Bimonthly mortgage plans do not require any extra but save slightly on interest by advancing the payment by half the month. On average, these types of arangements only shorten the loan term by approximately one month on a thirty year mortgage.While each option may prove itself best for a segment of loan seeking none will be a perfect fit for everyone. Depending upon personal finances, the length of one intends to residein the home to be purchased, and for many, the perfect home option will vary widely from one consumer to another.

MARKETING

Marketing properties is where the magic is, and owners evaluating your services want to know that you can do this better than anyone else.

You’ve supplemented your traditional marketing plans with Syndication, an automated way to advertise the client’s home on over 50 high traffic websites and search engines, and promised to allocate a budget towards Enhanced Listings. Two very powerful marketing tactics proven to boost exposure to more online buyers, and that can generate up to twice as much interest in the property, or more.

But just in case some of your local competitors are up to the challenge, here is another one that has ‘wow’ written all over it. An idea that can make any wise seller sit up.

Boost your plan with a promise to create and launch an entire website just for the client’s property! Offer to give their property a home of its own on the World Wide Web. How much cooler value is there?

A dedicated website makes it much easier to find the listing on the Internet, enhances its presentation and bolsters its position on search engines. It’s important that the seller understands the relevance of this plan to the sale of their property. Emphasize the importance of search engine rankings and better presentation, as your seller may not be as Internet savvy and may not completely appreciate some of the ideas.

As well, explain that over and above online prospects, that many local buyers interested in the neighborhood typically drive around the area to physically check out inventory. That for this target, it’s inconvenient to stop to scan QR Codes or jot down the agent’s phone number.

Technically, this means that more drive-by prospects are likely to miss or forget the phone number, if they try to commit it to memory. The more determined would try various way to look up the property on the Internet or ask their agents to research it. However that is not as convenient for them, nor as promising for you. There are too many ‘ifs’ and ‘buts’ involved.

Your single property website idea mitigates these risks, hardly costs anything per property and is as easy to set up as 1 2 3.

URL to friends and neighbords.

Single property sites also help to differentiate a property within a certain neighborhood, make the agent behind it seem like a star, and sets you up to capture more leads for your client, more quickly.

With high end single property website solutions today available for pennies per property and can be set up in minutes, the only thing that’s left is to get out there and seal that new listing deal.