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GA Loan: Mortgages For Buying A New Home

Updated on December 25, 2014

Taking that first financial leap to buy a home is scary. A GA loan can be helpful in easing some of the stress of wondering where the funds will come from to purchase that dream home. A mortgage loan is a type of secured loan used for purchasing a home or piece of land. This loan is secured against property and is provided by a financial lender. The lender can be a bank or a broker that specializes in mortgage loans.

Characteristics of a mortgage loan vary between each type, but the main aspects are as follows:

Prepayment

Mortgage loans will often charge a penalty for prepayment, restrict prepayment all together, or severely limit all or a portion of the loan. Knowing the stipulations regarding this loan trait in advance is the only way to avoid penalties from being accrued.

Term:

There are a certain number of years that the loan is provided and full payment is required by the end of this term. Some mortgage loans are only for 5 years, while others can last for up to 30 years. The main part of the loan is paid slowly through amortization,

Interest:

The amount of interest on a mortgage loan can either be fixed or adjustable. A fixed-rate mortgage loan has the same interest rate throughout the life of the loan. An adjustable-rate mortgage loan has a rate that fluctuates with the market.

Payment Amount:

Payments are made each month. These payments are the same each month for a mortgage loan with a fixed-rate, while an adjustable-rate loan has monthly payments that fluctuate with the interest rate. People who want to know what the exact amount will be required for payment each month prefer mortgage loans with a fixed rate.

Fixed-rate Mortgages:

Even though these are often more expensive than an adjustable-rate mortgage, fixed-rate loans tend to be more popular with people purchasing homes. 15 and 30 year loans are the most common types of fixed-rate mortgages issued. Usually, the higher priced the home, the longer the term of the loan. Due to a rise in housing, there are now 40 and 50 year mortgages as well.

 

Adjustable-rate Mortgages:

These mortgages are adjustable because they are attached to an index. In the United States, there are six indices that are used more than others. Characteristics of this type of mortgage include; interest rate caps, negative amortization, an adjustment period for refiguring the monthly payment, and an initial discount.

Mortgage insurance can also be taken out for the protection of the lender. When the loan-to-value ratio is more than 80 percent, a lender will use mortgage insurance for protection. This high of a percentage can pose a threat to the lender and fear of having the borrower default on the loan is greater than with someone who has a much lower percentage.

When savings are low, but the need for a home is great, a GA loan can be the answer. Financial lenders are always available to answer any question imaginable about the various mortgage loans available.

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