Buyer Resources

Choose the Right Mortgage When Buying Pittsburgh Property

There are many financing options available to you when buying a home in Greater Pittsburgh. But how do you choose which one is right one for you?  

The 7 Basic Types of Home Financing Options

Though there may seem like thousands of financing choices are available, there are actually only a few basic types of home mortgages to choose from, which can make your decision a bit easier. 

Fixed-Rate Mortgage

  • Oldest and most popular loan type
  • Rate is constant over the life of the loan
  • Can be taken out in 10, 15, 20, or 30-year lengths

Adjustable-Rate Mortgage (ARM)

  • Interest rate fluctuates
  • Initial rate is typically low than comparable fixed-rate mortgage
  • Are tied to one-year Treasury bills or another specific index
  • Have caps to limit drastic changes in rates and payments

two buyers talking with their real estate agent

Two-Step Mortgage

  • Usually called 5/25s and 7/23s
  • Fixed interest rates for the first 5 or 7 years; then change to convertible or nonconvertible loans
  • Convertible: converts the loan to a fixed loan for the remaining 25 or 23 years
  • Nonconvertible: converts the loan to an ARM
  • Both are 30-year loans
  • Riskier than fixed rates, but less risky than ARMs

FHA Mortgage

  • Pre-set spending limits
  • Amounts are set by the median prices of different cities within a particular area
  • Only 5% down is required (sometimes 3%)
  • Steep mortgage insurance premium and other upfront costs are required

VA Loans

  • Designed to help military vets buy homes with no down payment
  • Not allowed to pay points; responsible for some fees
  • Seller usually has to pay the extra money

real estate agent holding outline of a house

Balloon Mortgages

  • Can be any length
  • Some can be principal and interest; others only interest
  • Loan must be paid in full when it’s due: either amortized over 30 or 50 years and you pay the first 5 or 10 years before paying it off OR you only pay the interest until the loan is due

Shared-Appreciation Mortgages

  • Lender offers you a below-market rate in exchange for a share of the profits when the home is sold
  • You receive the tax benefits
  • Lender doesn’t make money unless you do
  • If home increases greatly in value, you’ll lose a lot of profit to the lender
  • Most common among first-time homebuyers working with non-profit groups that help low to moderate income families

two buyers standing outside a new house

How to Choose the Best Mortgage

To choose the best mortgage loan, you'll want to base your decision on several key factors, including your current monthly income, your future expected income, current assets, and your liabilities or debts. Here are a few questions you can consider when choosing a mortgage:

  • Do you want to pay the same amount each month?
  • Do you need a lower down payment?
  • Do you need to pay fewer up-front costs?
  • How long do you want to live in this home?
  • How quickly do you want to build equity?

Let Us Help You with the Details

Buying a home in Greater Pittsburgh can be challenging, but you don't have to do it alone. We can help you not only decide on the best mortgage but find your ideal home in your price range. 

Contact us today and we can recommend trusted mortgage lenders in the Greater Pittsburgh area. Then you can start the pre-qualification process and learn which lender and loan will work best for you. Anytime you need assistance, we're here to help.

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