Many new San Diego home loan programs make it possible for anybody to get
approved for a mortgage regardless of credit or income. Because of rising home
prices, many qualified loan applicants are finding it difficult to
afford a new home. With these individuals in mind, several loan companies
have started recommending a range of mortgage loans offering affordable
monthly payments.
The 40-Year Home Mortgage
Traditionally, San Diego home mortgage loans have a term of 30-years. Those who
can afford a higher monthly payment, and who wish to payoff the mortgage
earlier may opt for a 15-year term. Ideally, paying on a home loan for
30 years would offer an affordable monthly payment. However, due to an
increase in home prices across the nation, many young couples and those
with modest incomes are unable to afford overpriced homes.
The 40-year home loan is similar to the 30 and 15 year terms. The only
difference is that the mortgage is extended an additional 10 years. Of
course, homeowners will pay more interest. The 40-year mortgage does
not offer a tremendous savings, but it may provide a cushion. On average,
homeowners can expect a monthly savings of about 0 on a 0,000
mortgage.
Interest-Only Home Loans
Within the past five years, interest-only home loans have increased in
popularity. Again, these loans are advantageous in overpriced housing
markets. Nonetheless, there are pros and cons to these sorts of home
loans.
With an interest-only loan, homeowners only pay the interest for a
specific term, usually five or seven years. However, you may obtain a loan
with an interest-only period for three or ten years. During the
interest-only period, all payments are applied toward paying the interest, and
not reducing the principle. Thus, mortgage payments are lower.
Interest-only loans are beneficial because they create more affordable
housing. The downside is that once the interest-only period ends,
mortgage payments will increase.
Because monthly interest-only mortgage payments will not reduce the
principle balance, at the conclusion of the interest-only period,
homeowners will owe the original mortgage amount. If the housing market
continues to increase, this will not pose a problem. However, if home prices
decrease, those who select an interest-only option may be unable to sell
their homes.
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