The ABC’s of Mortgage Loans

When you are seriously shopping around for a house and mortgage company, you will probably begin to feel a bit overwhelmed. 

There are just too many types of mortgage loans out there. At Indigo Mortgage, we like to make sure you make the most informed decisions possible while shopping.

That’s why today we are going to talk about three of the best loans out there. They are common, relatively easy to get, and all around have the best interests of the customer in mind. So, what are these three loan types and where do they come from? 

Assumable Mortgage

Typically, when you go to buy a home, you have to shop around for a mortgage and so on and so forth. The Assumable Mortgage process skips all that and allows you to take over the previous owner’s mortgage loan.

There are a few things to keep in mind with this type of mortgage. Sure, you only have to pay off what they have left and, while that can be a very good thing, you could also get locked into a bad interest rate among other things.

Also, the assumable mortgage requires that you get approval from mortgage lender. Mainly, as a buyer, you should only really be interested in this type of mortgage if the interest rates have risen as you will get to jump in on the lower rates that come with the Assumable Mortgage, which will save you money.

Balloon Mortgage

The Balloon Mortgage is appropriately named. In the beginning, you will have a much lower interest rate than others, but after about 10 years (the time can be shorter as it is decided in the agreement), you will find that the rates could very well spike.

So, like a balloon that rises until it pops and falls, your best bet with the Balloon Mortgage is to pay off the loan before the interest rate increases.

Conventional Mortgage

Finally, we have the conventional loan. This is one that is not insured by the government. However, as long as you work with a reputable company like Indigo Mortgage, you will be fine. 

When looking for a lender, it is important to never deal with Internet-based mortgage companies. Instead, it is important to partner with a lender that has a physical office where you can interact and get to know who you are doing business with when it comes to your Conventional Mortgage.