Mortgage Lender Monroe Township

Monroe Township, NJ is a lovely area to buy your first home. You should be excited about this process, but educated in the steps you need to take to secure a home loan. First, get pre-approved for a loan. But, which loan seems to be the best?

FHA, Fixed-rate, adjustable-rate, and jumbo adjustable-rate mortgages are all valid options for first time home buyers.

FHA Mortgage

Possibly the most popular loan available to many first time home buyers is an FHA loan. It is backed by the federal government. Buyers can pay as little as 3.5% towards a mortgage and have a lower credit score as the requirements are not as stringent as with many other loans.

In the future, buyers have the option to do an FHA streamline refinance. It is one of the fastest ways to refinance a mortgage to today's interest rates. This is great because of the recent drop in interest rates.

FHA mortgages typically have a higher insurance premium than other loans. Sometimes this premium makes the loan less affordable. Luckily, FHA mortgage insurance premiums on 30-year Fixed FHA loans have been reduced in recent months. This is exciting for many home buyers.

Fixed-Rate Mortgage (FIXED)

This is a favorite among many first time home buyers because:

  • it has a fixed interest rate during the entire duration of the loan.
  • It allows you to budget with certainty as you know the exact figure on the monthly payments. You will never worries about fluctuating interest rates.

Jumbo Adjustable-Rate Mortgage (Jumbo ARM)

This type of loan is for a luxury home or homes located in expensive areas. The mortgage loan amount exceeds the compliant loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO). It is not guaranteed or securitized by Fannie Mae or Freddie Mac.

If you choose a jumbo ARM, the loan might be securitized by another institution at a high interest rate. If you are able to finance 20 % of the down payment for a purchase and have a large income and/or many assets to prove you can afford the loan, this could be the mortgage for you.

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages are just that, adjustable. After an initial period, the loan's interest rate will fluctuate depending on the market and ARM margin.

This type of loan is not ideal for many people because the interest rates can change wildly. Even if your income increases over time, it may not increase quickly enough to afford the loan.

If you will not own the home for long, however, it might be worth it to take advantage of the low introductory interest rate.

No matter what you choose, know that we at Millennium Home Mortgage will be here to help you.