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How To Shop For Low, Interest Only Mortgages
By Hans
If you're seriously interested in knowing about interest only mortgages, you need to think beyond the basics. This informative article takes a closer look at things you need to know about interest only mortgages.
Where do you find low interest, interest only mortgages? Almost every store on the street offers these types of products, but who is the best, and who is the lowest? That's going to take some work on your part, and maybe just a little luck.
What kind of information will you need in order to shop for and secure a great interest only mortgage, with a great low interest? Well, you're definitely going to need a good credit rating, proof of income, an appraisal on the property, and a little bit of luck. There are several products out there in the interest only segment of the market, and a few are actually going to have a pretty low interest rate tied to them.
For example, the 3/1 ARM, or the 5/1 ARM, these mortgages should have great interest rates, and if you have great credit, you should be able to find financing to suit your budget, your desire for a low interest rate, and an interest only that you can live with. These types of adjustable rate mortgages offer the interest only feature for a very limited time, and this is what the average consumer should discipline him or herself to use for financing. Extending the interest only option out past these years, could put the consumer in a dire position, should the real estate market take a downward turn, they're going to be left with a huge mortgage, and property that is no longer worth the original amount. Now, that's not likely to happen since the value of the average home in America has seen a steady 5 to 6% growth for the last 10 years. But, it could happen. Take a look at the stock market after the tremendous growth spurt of the late nineties.
Other variables in your quest for a low interest rate will be determined by the type of lending institution you choose, the determination of any government program eligibility, and your geographical location.
Sometimes the most important aspects of a subject are not immediately obvious. Keep reading to get the complete picture.
Knowledge can give you a real advantage. To make sure you're fully informed about low interest rate, keep reading.
Banks are traditionally a little higher with their down payment requirements, but their interest rates are usually lower than those of a company. The exception: online lending. Thanks to the fact that this is an area of growth that everyone and every company are promoting, they're striving to compete with even the lowest interest rate lenders, in order to grow their market.
What kinds of government approved loan programs are available for the low interest-only shopper today? There are actually more programs available today than any other time in recorded history; and the ability to qualify for these programs is at an all-time high. Fannie Mae, or the Federal National Association and Freddie Mac set guidelines and product availability for homeowners and residents that quality for low- to moderate income based mortgages. They also offer low-interest only mortgages in order to accommodate an ever broadening market. The graduated payment is an option for FHA homeowners who currently have low to moderate incomes
Illinois and Wisconsin Mortgage Rates as of 08/27/2008 9:59 AM CST : Current Mortgage Rate Trend: steady
30 Year fixed: 6.500% (6.565% APR)
15 Year Fixed: 6.000% (6.105% APR)
3/1 Jumbo ARM: 7.000% (7.165% APR)
5/1 Jumbo ARM: 7.375% (7.543% APR)
5/1 ARM: 6.250% (6.313% APR)
3/1 ARM: 6.250% (6.313% APR)
30 Year FHA and VA: 6.500% (6.564% APR)
30 Year Rural Housing: 6.750% (6.815% APR)
3/1 ARM Lot Loan: 6.875% (7.034% APR)
1/1 ARM Lot Loan: 6.725% (6.882% APR)
but expect them to increase substantially over the next few years; this can be compared to a balloon note or the interest only products in use today.
Your location will play a key role in your ability to obtain the lowest interest rate using the interest-only option, also. Prospective homeowners looking to purchase a home in a high end, resort area will, of course, have more choices available, as there are more buyers and sellers competing, as well as lenders for business. The other geographical contributing factor is the real estate market in your area. If the market is great, prices are not suppressed, and there is moderate movement in the buy and sell market, it increases your chances of obtaining the low interest rate you're seeking.
The interest only product and a low interest rate are not mutually exclusive. They can be paired, and under the right circumstances produce a winning product for the right consumers. The route to achieving this goal will take education on the part of the consumer, hard work, and a little luck in locating the right lender.
Knowing enough about interest only mortgages to make solid, informed choices cuts down on the fear factor. If you apply what you've just learned about interest only mortgages, you should have nothing to worry about.
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