The times are changing. The housing market in South Florida has come a long way since the 2008 subprime mortgage meltdown. Back then, mortgage lenders in Pompano Beach only approved borrowers with almost perfect credit score. Fast forward to 2015 and the Mortgage Bankers Association has predicted a 42 percent decline in the dollar amount of new and refinanced mortgages. Mortgage lenders in Pompano Beach are now expanding their base to more home buyers with slightly lower credit scores as well as providing more options who can’t afford to make a 20 percent down payment. With more mortgage lenders in Pompano Beach now taking greater risks, what does this mean for people seeking a mortgage loan in 2015? Here are some viable options.
One of the most popular forms of mortgage loans in Pompano Beach is the fixed rate mortgage. At first glance, it’s the most simple and straightforward of all home loans. When choosing a fixed rate mortgage loan, the interest rate stays the same throughout the life of the mortgage. To make things even simpler, the principal and interest payment also remain the same. But if you’re more comfortable with consistency, be prepared to pay a little more. In 2014, the average interest rate for 30-year fixed rate mortgages was 1.22 percentage points higher than adjustable rate mortgages. Keep in mind, some fixed rate mortgages also have 15-year repayment periods, carrying lower interest rates while requiring larger monthly payments because the repayment period is shorter. It’s probably not wise to enroll for a 15-year mortgage unless you can make the payments.
The second option is an adjustable rate mortgage in Pompano Beach. In many cases, these mortgages have a fixed rate during the first three to ten years until the rate eventually adjusts yearly. Known as ARMs, they’re considered to be more risky than fixed rate mortgages because adjustments in interest rates can increase monthly payments based on the size of the loan and the change in interest rate. Before enrolling in an ARM, it’s important to discuss with your mortgage lender in Pompano Beach on how the interest rate can change during the life of the loan.
Many homebuyers opt for interest-only mortgages simply because of the name. During a set period of five to ten years, the borrower doesn’t have to pay down the principal. Most interest-only mortgages are actually ARMs, while some carry fixed interest rates. But it’s always important to keep in mind that rates can fluctuate. Borrowers can initially save tens of thousands of dollars in saving through interest-only mortgages. During the housing crash, interest-only mortgage became more popular because it allowed borrowers to afford more expensive homes. However, once the payments increased, many homes ended up in foreclosure.
The final option is piggyback loans. These are typically offered to borrowers can only make small down payments. Borrowers usually enroll in home-equity loans in Pompano Beach or home equity lines of credit to pay for renovations or expenses. One major drawback is homebuyers could end up owing more than their home is worth if property prices go down. Selecting the right mortgage loan in Pompano Beach requires a tremendous amount of research and homework. But you also need a licensed and experience mortgage lender in Pompano Beach to provide you with the best information. To learn more about which mortgage loan fits your needs, contact the professionals at Ace Mortgage Loan Corp. today.