Real Estate Options - Paying for Real Estate

Real Estate Agent

Perhaps just as important as buying a home is how you pay for it. The ideal situation would be to pay for the house in cash with no debt to weigh you down, but for the vast majority of us, this is just something that is not feasible. So the next best option is to get a loan, obviously.


There are many different kinds of loans out there, but the most common loan is a mortgage. At first glance, a mortgage is simple; you borrow money and you pay for it monthly. But when you start to do a little research out there, you will quickly find out that it's not as simple as you first thought.


The mortgage choices out there are as confusing as they are plenty, and every year it seems that the banks come up with new and more confusing mortgage choices.  To help you out in your search, here are some of the choices available to you.


Fixed Rate Mortgage

Your interest and your monthly payment will stay the same for the entire term of the loan. This is the most popular type of mortgage because it protects the home owner from the possibility of future monthly payment increases.


Fixed Period Adjustable Rate Mortgage (ARM) hybrid ARM

The hybrid ARM is an adjustable rate mortgage that features an initial fixed interest rate period, typically with a term of 3, 5, 7 or 10 years (source). After the fixed rate period expires, the interest rate becomes adjustable for the remainder of the loan term. Fixed period ARM's are often named by the length of time the interest rate remains fixed.


Interest Only Mortgage

It is an interest only mortgage or a fixed rate loan which contains an interest only period. With this borrowers can delay making principal payments and make monthly payments that only repay the interest. When the interest only period ends, the monthly payments would significantly increase when the required monthly payments started to include principal plus interest.


FHA /VA Loan

FHA loans are government insured loans that can be a good fit for homebuyers with limited income and funds for a down payment. These loans are insured by the Federal Housing Administration (FHA)




VA loans: VA loans are insured by the Department of Veteran Affairs. To qualify for a VA loan, you must be a current or former member of the US armed forces or the current surviving spouse of one.


Not sure where to get started with a loan? If you have a great real estate agent and you haven't locked this down yet, they will often help you to figure out who you need to meet with and what sort of loan you should start looking for. This is true if you're looking for Scottsdale homes for sale or homes for sale pretty much anywhere else on the planet. The point here is to make sure that you have a great real estate agent that is willing to help you every step of the way, instead of simply turning you away because you don't have your loan figured out just yet.



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Troy Erickson
Diverse Solutions Realty - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Harry - There are certainly financing options for anyone looking to buy a home. Buyers must research the best option for their needs.

Apr 26, 2015 03:20 PM #1
Sham Reddy
H E R Realty, Dayton, OH - Dayton, OH

Interest only mortgage is the worst form of mortgage ever invented.  Its only helps lenders and not the purchaser.  I would never even suggest that to my clients

Apr 26, 2015 08:26 PM #2
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Harry Ikanson

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