Understanding Ulster County Mortgage Options
When most buyers think of an Ulster County mortgage they think of a traditional mortgage, one that has a fixed rate for 30 years. That is the mortgage that people have been using for years. However, there are other options available.
Depending on your situation, an alternative Ulster County mortgage may be the best fit for you.
Interest-Only Mortgages
An interest-only Ulster County mortgage is one where the homeowner only pays on interest for the first 10 years of having the mortgage. Once this period is over, the loan is amortized for the remaining 20 years. This loan can be helpful for a homeowner that is building their financial health and working their way up the ladder.
However, while this loan gives you a smaller payment in the beginning, it is going to be a much higher payment for the remainder of the loan. You will not have any equity in your home after 10 years unless the market improves on the house. You will not have paid anything on the actual balance of your loan.
Pay-Option ARM
A pay-option ARM allows you to pay a fixed payment on your ARM. This could be a benefit because you always know what you are going to pay regardless of what your mortgage is doing.
However, it can lead to negative amortization. If the interest rate goes up more than what your fixed amount covers, the unpaid interest adds back into the balance of your loan. When this happens, you end up paying interest on your interest.
Balloon Mortgage
A balloon mortgage allows the Ulster County homeowner to pay a small monthly payment for either five or seven years. Once that period is over, the remainder of the balance is due.
If you don’t have the funds to pay it at that time, you become responsible for obtaining another mortgage or refinancing the loan. If you are unable to qualify at that time, you could lose your home.
Cash-out Mortgage
With a cash-out mortgage, you can refinance your mortgage to walk away with cash if you had equity in the Ulster County home. This can be helpful to access cash for things like home improvement projects or purchasing another property, but there are risks involved.
If you take the equity out as cash and the market turns down again, you could end up owing more than the value of your Ulster County house.
Lease-to-Own
This can be a good option for Ulster County buyers, but a risky one for sellers. The buyer basically rents the home from the seller for a set period of time. During that time, the payments are held in an escrow account which can be used for a down payment on the house.
However, it can be difficult to find a seller that is open to this option because they take on a lot of risk.
Understanding each loan and how they apply to your situation is the key to choosing the right Ulster County mortgage. There is not one option that is the best for everyone. Talk to your lender to see what alternative loans are available for you.