Consider Types Of Loans You Can Acquire Before Purchasing A Condo

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Consider Types Of Loans You Can Acquire Before Purchasing A Condo

Buying a condominium in a township is considered more economical in comparison to owning a home in a well-established city. This is the main reason why most of the people prefer to invest in Avenue South Residence which has great floor plans and provides an excellent community for the residents. Moreover, owning a condominium through proper financing is again considered as a great prospect since it doesn’t cause any strain at the savings of the buyer.

What are the different types of loan options?

Governmental loans

The government provides loans only for those condominiums which come under their pre-approved list. There are two basic types of loans which you can acquire viz. FHA and VA. If you are applying for FHA loan then you have to pay around 3.5% as a down payment. It is very easy to apply for the FHA loans as you don’t even need a high FICO score. If a person has a FICO score around 500 or more then that he or she will be considered as legible for the loan amount.

Moreover, the VA or loan guaranteed by the Veterans Administration is only approved to certain people. Only lenders who are approved by the VA can offer this loan. In this type of loaning, the lender is fully secured even if the borrower won’t be able to repay the amount back. To apply for this loan, one has to be armed force personnel, national guard, veteran, etc. Furthermore, it is mandatory for a borrower of VA loan to pay a lump sum of around 3.0% of the total amount he or she has applied for.

Conventional loans

These types of loans aren’t insured by the government, they are also called as non-GSE loans. Unlike government loans, lenders have free will to alter the loan conditions. Thus, they can ease the interest rate payment for a borrower.

Types of conventional loans

Sub-prime and adjustable loans

They are those conventional loans where the borrower gets the credit amount if he or she has a poor credit score. In adjustable loans, the lender balances the interest rate amount by considering the overall fluctuation in the economy of the country. Thus, the monthly payments of this type of loan tend to fluctuate.

Amortized loans

These are those types of conventional loans which work on the total lending amount and the loan-to-value ratio. In these types of loans, the total property value is also estimated beforehand. In reality, the loan-to-value ratio can be lower than 80% but borrowers have to make complete payment for mortgage insurance.

Moreover, in this loan, the time and interest rate are inversely proportional to each other. For example, if a borrower chooses 30 years as a loan payback then he or she has to pay the less monthly payment in comparison to those borrowers who had opted 10 years as a loan payback. In amortized loans, the interest rate is decided during the starting of the borrowing process. The amount of monthly interest stays the same throughout the time period of the loan payment. Thus, in this type of loan payment, no balloon payment is being entertained by a lender.

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