Few Things You Should Know About Residential Loan Programs

Few Things You Should Know About Residential Loan Programs

Category : Residential Loans

Is this the first time that you are buying a home? Are you confused about the complicated financial terminologies? There are so many types of residential loans available in the financial markets today and you may find it difficult to choose the right one for you. Below are the most common type of residential loans from which you can choose the most appropriate one for you.

OPM: Also known as other people’ money, means the money that does not belong to you, but you borrow it from other people. The source of this money could be bank loans, hard money lenders, government loans etc.

Investment-only mortgages: In ‘Interest-only mortgage’ you are required to pay the interest only for a certain number of years (usually for 3-5 years) and the rest of the amount can be paid at the end of the loan life. This loan is good for people with less money and purchase houses in a property appreciation environment.

ARMs: Adjustable-rate mortgage loans (ARMs) are flotation loans. ARMs are tied to an index rises or falls based on government loans. ARMs are often easier to qualify for, but the cost of your debt is therefore, higher than the traditional mortgage.

Hybrids. A hybrid loan is a combination of an ARM, and a fixed-rate loan. With a hybrid loan, it is easy for you to pay fixed-rate interest for a certain number of years, after that, you will have to pay floatation interest, i.e. the interest rate is tied to the reference index.


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