Making major financial decisions in life can be stressful, particularly when you are mortgages feeling under-equipped concerning your knowledge of the situation. Mark Hauser of Hauser Private Equity is a private equity principal with decades of industry experience exploring mortgages, refinancing homes, and guiding clients throughout the process.
Private equity principal Mark Hauser took time out of his day to detail a little bit of his knowledge regarding how work and the different types of loans associated with them. Let’s leap into this field of expertise to come away with a better understanding of the sphere.
Residential Mortgage 101
In the United States, the real estate market revolves around residential and loans between the financier and the purchaser. Once the homebuyer makes an effort to put down a cash deposit, the lender will move forward with the remainder of the price on behalf of the seller. Monthly payments are then made, including the balance owed and added interest. If payments are not made, the lender can legally reacquire the property.
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Most Common Types of Mortgage Lenders
Homebuyers in today’s day and age can make a home purchase through one of any number of mortgage lenders. Depending on where the potential homebuyer lives, they’ll be able to work with one of the following institutions to secure their purchase.
Banking System – Whether working with a national bank or a regional/community bank, home buyers can work with these banking systems to find the right to meet their needs.
Credit Unions – Credit unions offer a variety of banking services, including working with, though they typically do not have as much on hand as a bank might.
Professional Brokers – Professional brokers can help buyers find the terms they need to profit on the purchase in the right way. Mortgage brokers will work through the sale up until the transaction has been completed.
Online Lenders – Finally, online lenders specialize in residential. These online lenders are popular because they are willing to work with buyers that have lower credit scores.
Common Types of Residential Mortgage Loans
In the United States, consumers can make a choice from five different mortgage loans. Each loan has its own pros and cons, which can be different depending on the market.
Conventional Loan – A conventional mortgage loan can be used to purchase an investment property or second home. Homebuyers with great credit scores and large down payments will find this loan preferable.
Jumbo Mortgage Loan – A jumbo loan is geared toward the type of home buyer who has excellent credit and plans to purchase a higher-priced property. In higher-priced communities, Mark Hauser notes that this may be the only option available.
Adjustable-Rate Loan – An adjustable-rate mortgage loan (ARM) sees interest that rises and falls with the conditions of the market. Some ARM loans will offer fixed interest rates at the time of offering before switching to a variable rate.
Government-Insured Loans – Finally, we have government-insured mortgage loans, ideal for homebuyers with lower credit scores and a lack of funding for a down payment.