Types of Mortgages in Galesburg, IL

Houses can be expensive so that is why many people choose to pay for them with mortgages in Galesburg, IL. A mortgage is a legal contract between the home buyer and the lender. The home buyer promises to pay the lender the cost of the house based on the lender’s terms. Mortgages commonly have terms between fifteen and thirty years. Loan terms are how long you have to pay off the mortgage. The lender adds interest rates to the monthly payments so they can profit from the loan. Interest rates can be adjustable which means they can increase or decrease during the loan term or fixed wich means rates stay unchanged. The process starts once your application gets approved by the lender.

You can choose from various kinds of mortgages. The most common mortgage is the prime loan. Prime mortgages are only given to buyers with good credit scores. These mortgages have the lowest interest rates. A sub prime loan is available for buyers with bad credit, though, anyone can apply for them regardless of financial history. However, sub prime loans come with higher interest since many consumers who use them are at risk for missing payments. Another type of mortgage is the 80/20 loan. The 80/20 loan involves two parts. The first loan is for 80% of the home price and the second loan is at 20% of home cost. The second loan has a higher interest, but when you combine payments, the cost is lower overall. A reverse mortgage works like the name implies. Instead of making payments to the bank, the bank pays you. Reverse mortgages are intended for home owners 62 or older and you must live at the residence. Otherwise, you will be responsible for paying back the loan. A take over mortgage transfers the terms over to a different borrower. You still have to pre-qualify before you can get the loan.

A mortgage can make your dreams of owning a home come true. You must use discretion when shopping for provider so you get the best rates. Educating yourself on mortgages will help you make the wisest choice. Contact Midwest Bank for your loan needs.

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