Home ownership is the ultimate dream for everyone. For many years lenders have helped many achieve their dreams through mortgages especially when one has a job for financial security. However, this dream has been elusive for many contractors since their jobs tend to be a drawback. Contractors are employed on timely basis and that’s the worry for lenders. Even with hurdle contractors can still get tailored mortgages for contractors. Financial institutions have come up with different types of mortgages to suffice eligible contractors. It is therefore important that a contractor settles for a mortgage that offers ideal for their financial situation so as the get that home they have been dreaming of. Here are some types of mortgages contractors can opt for:
Financial advisors would unanimously agree that contractors should go for fixed rate mortgages. These are the types of mortgages for contractors that have a locked interest rate all through the duration of mortgage servicing. Interest rates might drop during the duration of the loan and you can always choose to take advantage of the lower rates through refinancing. This means that your set interest will never go up but it can be brought down if you choose to refinance. You must be certain that this is included in your application.
Adjustable Rate Mortgages
They are also popular choices even though they can sometimes turn out to be a bad option. Initial interest rates for adjustable rate mortgages for contractors. are usually lower than the fixed rate mortgages. Technically you will be paying lower initial payments as well. During the mortgage servicing term your interest rates are bound to change with the changing market trends. In a nutshell your monthly payments are bound to fluctuate from time to time as well. Your bet should be that they will be lower.
Interest Only Mortgage
The characteristic feature of this mortgage type is that you will be making lower installments. Interest only mortgages for contractors allow for flexibility in their payment options. However, these mortgages do not allow for the growth of equity and once you have paid your interest your principle of the loan comes out due once.
Private Mortgage Insurance
Not all mortgages have to be insured. In fact there has to be basis or grounds for insuring a loan. Some lenders get hesitant about some contractors and are just not certain whether they will repay back their loan or not. For the lender to be safe some mortgages for contractors are insured against failure of pay. One of the many reasons for this is in case a contractor cannot raise 20 percent down payment. To avoid defaults in future contractors should be creative during their financing. For example you can take up a loan that can pay for the required 20 percent down payment then you won’t have to deal with insurance. Taking another loan to pay for the down payment is simply a lesser evil because having your loan insured will also mean more money out of your pocket goes to the insurer.