Variable interest loans such as the fluctuating ARM’s (Adjustable Rate Mortgages) should be loan products reserved for the more experienced and savvy real estate investor versus the traditional home buyer. A fixed rate loan is a mortgage product whose principal and interest payments do not change over the course of 15 or 30 years. Locking in your loan at a fixed interest rate based upon today's relatively low market rates is a great way to protect the loan from higher interest rate adjustments in the future.
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FIXED RATE vs. VARIABLE INTEREST RATE
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 Conventional loans are based upon the buyer's credit history, and if the buyer qualifies, then would be required to pay a down payment and interest rate based upon their respective creditworthiness. The amount of down payment can vary from 5-20% and PMI (Principal Mortgage Insurance) is required for any loan (except VA) when less than 20% of the principal loan is paid. VA (Department of Veterans Affairs) loans and USDA (US Department of Agriculture) loans allow for 100% financing, but closing costs of the loan may still have to be paid along with a possible funding fee. FHA (Federal Housing Authority) HUD loans are sponsored by Fannie Mae and Freddie Mac and allow first-time home buyers to obtain a loan with only 3.5% down payment and PMI would still apply. CONVENTIONAL LOAN vs. GOVERNMENT SUBSIDIZED  For the purposes of obtaining a mortgage, banks may classify a real estate investor as anyone buying a second home, even if you decide to use it solely for vacation purposes. A 20% down payment is typically required for a second mortgage. A first-time home buyer is classified as anyone buying a home for the first time within the last 5 YEARS. Therefore, if you have rented for at least 5 years after you sold your last home, then you are now considered a first-time home buyer eligible for the government subsidized programs listed above. FIRST-TIME HOME BUYER vs. REAL ESTATE INVESTOR

© 2016. Melentree Realty, LLC.

All Rights Reserved.

Julius Anthony Melendez

Licensed Real Estate Broker

 

1203 Florida Ave

St Cloud, FL 34769

(407) 729-1640 office

(407) 563-3925 fax

 

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