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These are loans that are offered to qualified applicants that may have recently filed for Bankruptcy, foreclosure, or have had late payments on their credit reports. There are also programs for people who cannot verify their income. These are referred to as "Band-Aid" loans or "Temporary Financing". Their sole purpose is to offer financing to these applicants until they can qualify for Conventional "A" financing. The interest rates and programs vary, based upon many factors of the borrower's financial situation and credit history. 30 year fixed
loans are probably right for you if you don't plan to move or refinance for at least 10 years and you expect interest rates to increase over this period, or you just feel comfortable knowing that your payment won't change no matter what. This loan may also be right for you if you don't expect your income to increase significantly over the next several years.
30 year fixed loans are the most popular
loan product. Payments are reduced compared to a 15 year loan. However, a 30 year
loan doesn't make a lot of sense financially. A 15 year loan is a few hundred dollars more a month, but it saves money on interest in the long run. If you take out a 30 year fixed
loans, you will be paying three times the amount of interest to the bank compared to a 15 year
loans. That's literally money thrown away that can be used towards things like retirement or tuition for your kids. Also keep in mind that you will own your home twice as quickly if you take out a 15 year
loan, which can make all the difference if you plan to retire within 15 years.
Another option is to take out a 30 year fixed loans and discipline yourself to pay it back in 15 year. Though your interest rate will be higher, at least your have the flexibility of making a smaller payment if the need arises.
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