5 New York Mortgage Programs You May Not Have Considered - An explanation of less popular New York mortgage programs. Outlines the pros and cons for mortgage shoppers and home owners.
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An explanation of less popular New York mortgage programs. Outlines the pros and cons for mortgage shoppers and home owners.
Author: Anna Platz
Date: Dec 30, 2010 - 12:24:27 PM
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When most New York homeowners take out a new mortgage they most often opt for a 30 year fixed rate loan. It makes sense that this is the most popular program choice for both purchases and refinancing - spreading the loan repayment over thirty years keeps the payment down, and locking in a rate for that length of time avoids the risk of a rate increase down the road.
Still, a 30 year fixed rate mortgage is far from the only choice, and doesn't make the most sense in every situation. Here are a few other NY mortgage programs you may not have considered:
1)
20 Year Fixed Rate Loan
If you can comfortably afford the payment on a 30 year loan why not check out a 20 year mortgage? By spreading the payments out over 20 years rather than 30 you will likely get a slightly better interest rate, but the real advantage is that you will pay no interest at all for 10 full years when compared to a 30 year term. You'll build equity in the home faster and be mortgage free a decade earlier.
2)
10 Year Fixed Rate Loan
A 10 year loan term takes the advantages of a 20 year loan even further. The monthly payment will be considerably higher than it would with a longer term, but the interest savings are substantial. Run the numbers with your loan amount using an online mortgage calculator to see for yourself. While it might be tough for many first time home buyers to manage the payment on a 10 year home loan it could be the perfect fit for a longtime homeowner considering refinancing to take advantage of a lower interest rate. If you only have 10-15 years on your existing loan there's no need to reset the clock to three more decades of mortgage payments. If you select a 10 year loan term you'll generally be rewarded with an even lower interest rate.
3)
USDA Loan
Many homeowners have heard of FHA loans, government backed mortgages allowing lower down payments or a smaller amount of equity and less restrictive credit requirements. But have you considered a USDA loan? This more specialized government loan offers the very rare opportunity to borrow 100% of the value of a property. Other advantages include no monthly mortgage insurance, low mortgage rates, and more flexible guidelines than many conventional programs. In order to qualify the property must be in a rural development area (as designated by the USDA) and the borrower(s) income must be below a certain level (in addition to other requirements). This certainly isn't the answer for every home owner - no, you won't be able to finance that Manhattan condo with a USDA loan - it is a great program for those who qualify.
4)
7/1 ARM
After seeing the dramatic increases in foreclosures and homeowners in crisis beginning in 2006 taking out an adjustable rate mortgage may seem like a scary idea. Couldn't the rate skyrocket? Isn't that what got so many people in trouble? It's important to look at the numbers and not just dismiss an ARM out of fear. An adjustable rate mortgage has a fixed rate for a period of time at the beginning of the loan term, in the case of a 7/1 ARM that period is 7 years. If your plans involve only owning this home for two to three years before moving on why not consider a 7 year ARM and take advantage of the lower rate and payment that generally comes with it? Of course it is important to have a plan in the event you decide not to move.
5)
Mobile Home Loan
If you've been holding off building on a piece of land due to the expense why not consider a mobile or modular home? You will likely be surprised by the options available and how far the designs have come. Get enjoyment out of your property now and when it comes time to build your dream home you can relocate the mobile home and sell it. Of course you may find that it suits your needs for many years to come!
Be sure to discuss any New York mortgage programs you are considering with your loan originator before making a selection. Look at the interest rate, monthly payment, interest paid over the life of the loan, the risk of rate increases, and the terms of the specific programs to be sure you are making an informed decision.
Anna Platz is a writer and SEO Specialist with Wilmington SEO & Marketing, based in Wilmington, NC. She specializes in writing about NY mortgage financing and real estate, including condo financing and real estate investing.
View all articles by Anna Platz
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