Get to Know the Different Mortgage Loan Options

Many home buyers end up paying too much on their mortgage because they were not able to sort through the maze of options and features available in today's mortgage marketplace. All mortgages are not created equal, so to speak, and depending on your circumstances, one mortgage could be substantially better for you than another.

Nowadays, most homeowners are not certain whether they should get a fixed rate or variable rate mortgage. Making the wrong choice could cost a home owner thousands of dollars in extra mortgage payment. To avoid this, these are just some mortgage options available for home owners:

1. Bad credit mortgage or Subprime mortgage

A subprime mortgage is a home loan provided to a borrower who does not qualify for the best market interest rates because of his or her deficient credit history. This type of loan cannot be sold on the primary financial market. Subprime mortgages may include loans on certain types of investment properties and certain mortgages for self-employed borrowers.

Take note that a subprime mortgage is perceived to have a higher risk of loss; hence it carries a higher interest rate than a prime mortgage loan. Subprime mortgages are risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and weak borrowers' financial situations.

2. Self-employed and business-for-self mortgage

Business-for-self mortgage is for people who are self-employed. If you are a business owner, an independent contractor or derive most of your income from sale commission, you can apply for a business-for-self mortgage. Having good credit is important in your application for a home mortgage.

3. Home refinancing or debt consolidation

Home refinancing is re-writing your home mortgage contract for the purpose of getting a larger loan using your home as security. By refinancing your home mortgage, you are taking equity out of your home. A new mortgage contract will replace your existing contract you have with your bank. There are certain costs involved in home refinancing, you should find out the costs and benefits of refinancing your home.

4. Getting a home equity loan

A home equity loan is a mortgage loan where you borrow money by using equity of your home. Whether you can be approved for a loan is dependent on your ability to make the required monthly payment and your credit standing. You should consider your personal situation, and which option works better for you. If in doubt, check with your bank or a mortgage broker.

5. First time home buyer mortgage

As a first time buyer you need to find out how much mortgage you can be approved. You have to decide where you want to buy and what type of home you want to live in.

6. Buy with 5% or no money down

This is the minimum requirement for a home buyer to qualify for a high ratio mortgage. A home buyer is also required to show he or she has her own savings to cover closing costs of at least 1.5% of the purchase price.

7. Renewing your mortgage

Renewing your mortgage with your bank depends on whether you are satisfied with the mortgage rates your bank offers you. Many home owners make an effort to find out and compare the mortgage rates available from other lenders and mortgage brokers. If you are not happy with what your bank is willing to offer, then you should consider taking your business to another financial institution.

8. Need a private or second mortgage

Second mortgages are loan contracts secured on real properties which already have prior first mortgage charges on them. Most second mortgages are private mortgage loans provided by private mortgage lenders. These private mortgage loans fill the gaps that some financial institution such as banks and credit unions are unable or unwilling to fulfil.

9. Leaky condo or foreclosed property financing

Leaky condos affect the lives of those home owners who are unfortunately burdened by the huge financial costs involved in their repairs. These are defined by failures of building envelopes, resulting in water entering the envelopes leading to rot, rust, decay and mold.


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