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Understanding Different Types of Mortgages Part 2

By
Real Estate Agent with Coldwell Banker Realty/Coldwell Banker Commercial NRT 30SA0872839 

Understanding different types of mortgages is essential for making informed decisions about home financing. Here are the main types of mortgages, along with their key characteristics:

6. USDA Loans (United States Department of Agriculture)

  • Eligibility: For rural and suburban homebuyers meeting income eligibility.
  • Down Payment: Often none required.
  • Insurance: Requires upfront and annual guarantee fees.
  • Best For: Low- to moderate-income buyers in eligible rural areas.

7. Jumbo Loans

  • Loan Amount: Exceeds conforming loan limits set by the Federal Housing Finance Agency (FHFA).
  • Interest Rates: Typically higher than conforming loans.
  • Credit Requirements: Stricter credit, income, and asset requirements.
  • Best For: Buyers needing larger loans than the conforming limits allow.

8. Balloon Mortgages

  • Monthly Payments: Lower initial payments, often interest-only.
  • Final Payment: Large lump sum (balloon payment) due at the end of the loan term.
  • Best For: Buyers planning to sell or refinance before the balloon payment is due.

9. Reverse Mortgages

  • Eligibility: Homeowners aged 62 or older.
  • Payments: Homeowners receive payments instead of making them, converting home equity into cash.
  • Repayment: Due when the homeowner sells the home, moves out, or passes away.
  • Best For: Senior homeowners needing supplemental income.

10. Combination (Piggyback) Loans

  • Structure: Involves taking out two loans simultaneously (e.g., an 80/20 loan where 80% is a primary mortgage and 20% is a second mortgage).
  • Purpose: To avoid private mortgage insurance (PMI) or to finance more than 80% of the home’s value.
  • Best For: Buyers who can manage two mortgage payments and want to avoid PMI.

Each mortgage type has its own benefits and considerations, so it's important to evaluate your financial situation, future plans, and risk tolerance when choosing the right mortgage for you. Consulting with a financial advisor or mortgage specialist can also provide personalized guidance.

 
 
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Thanks for sharing, make it a great Saturday and enjoy your

weekend!

Bill Salvatore, Realtor- Arizona Elite Properties

May 18, 2024 11:03 AM
Thomas Santore Lic Associate Real Estate Broker

Thank you,

Tom S

May 19, 2024 09:56 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker
Great information, thanks for sharing.  I hope you have a great day.
May 20, 2024 04:15 AM