The Key Features Of A Loan And What Is Best For You

If you are buying a home, it is important to know the details of your loan.

Whether you go with a conventional loan, FHA loan or a VA loan, there are different features that many loans offer.

The following are some features of a home loan:

• Fixed Rate – A mortgage with a fixed rate means your interest and mortgage payments remain the same, or “fixed”, through the entire loan. Typically the loans are for 15 to 30 years. A 15 year loan will obviously have higher monthly payments but you will end up saving more than half of the interest costs than a 30 year fixed loan and pay it off in half the time.
• Adjustable Rate – This type of mortgage is also known as an ARM. The interest rate on an ARM fluctuates during the entire life of the loan. Your interest rate will be modified based on a predetermined economic index established at the beginning of the loan. Most of the time a max is set on the interest rate to avoid enormous increases. An ARM is usually safe only if your budget can afford to handle fluctuating payments.
• Payment Option Adjustable Rate – This type of loan accommodates a households fluctuating cash flow which include minimum payment options, interest only payment options and others. You will want to thoroughly understand these types of loans because you need to make sure you are prepared for a sudden increase in payment.
• Balloon Rate – A balloon mortgage has a fixed rate but for a shorter term than 15 or 30 years. At the end of the balloon rate (the fixed rate), the borrower must pay the remaining lump sum or refinance. If the buyer is purchasing unimproved property that they plan to build on in less than ten years, a balloon mortgage may be a good option.

Talk to a lending professional to find out what the best type of loan for you is. We highly recommend knowing exactly what you are getting into when you apply for a home loan.

Does Declaring Bankruptcy Affect Your Mortgage?

Bankruptcy and your mortgage.

The short answer is “yes”. Bankruptcy can affect your mortgage in multiple ways depending on the type of bankruptcy you file for.

Sometimes bankruptcy is the only reasonable option you may have available in order to gain control over your financial situation once again.

Before you file, it is important to consider how it will affect your mortgage.

• If you are overwhelmed with debt, you may not be able to make your mortgage payments on time. If this is your case, your lender may start foreclosure proceedings against you. This mean the lender is allowed to seize your home to make up for the remaining balance you owe on your home. When you declare bankruptcy, you can stop a foreclosure. The court will impose an automatic stay on all your creditors, preventing your creditors from taking legal action against you during bankruptcy.
• The type of bankruptcy you file for will affect your mortgage liability. When filing for Chapter 7, you are usually discharged of your outstanding debts. Because your mortgage loan is secured by your home, however, your debt to your mortgage lender cannot be satisfied while the home remains in your possession. Depending on the equity in your home, you may be able to keep it after declaring Chapter 7 bankruptcy. In some cases, however, the court may decide your debt can be handled more efficiently by selling the property. When this happens, the court will repay your mortgage lender and any remaining proceeds of the sale will be used to pay off your other creditors.
• Once your debts are paid off and your mortgage payments do not place a financial strain on you, the court may grant you the option to reaffirm your mortgage through bankruptcy. This is usually only possible if your mortgage loan is still current.

Do you have questions about the repercussions of filing for bankruptcy? Please call our office at 951-461-2500.