Buying a Bungalow—Types of Financing

Most people who buy bungalows in Kolkata do not have the money to pay cash for them but do have a down payment. This means that they must obtain financing, but what type of financing is right for you? Most will take out a mortgage and start to look at their chances of obtaining one. There are several different financing options to choose from.

Private mortgage

If the bungalow you are considering is a bungalow township Kolkata, you may look for a private mortgage. This does not come from a bank or credit union but a private business or another person. These types of mortgages are sometimes used by those with poor or fair credit who know this would be the only way to get a mortgage to buy a bungalow. It will still need to be well documented to protect all parties.

Credit union or bank

This is generally the first place a person who wants to buy bungalows in Kolkata seeks out first. Both offer a variety of mortgage options from an adjustable rate to conventional fixed mortgages. These types of mortgages are not government-backed. The terms will vary based on your credit profile and lender.

• Conventional fixed mortgage—this type will give you the same interest rate for the duration of the loan.
• Adjustable-rate mortgage—this one will have an interest rate that will periodically change, sometimes even once a year.

There is also a hybrid mortgage, which will start as a fixed-rate mortgage and then change to an adjustable-rate mortgage. For example, if you have a 4/1 mortgage, the first four years will have a fixed rate and then every year the interest rate will adjust. Most will require a 20% down payment so check around to find one that fits your needs.

FHA loan

This stands for Federal Housing Administration and is part of the Department of Housing and Urban Development. It is a program to help first-time buyers of bungalow township Kolkata. The amount of the loan will vary by geographic area but they have several benefits that make them a great choice for financing. Most only have a requirement of 3.5% for a down payment but it may be 10% if you have a bad credit score.

Their interest rates are more favorable because they are backed by the federal government. They will help you through the qualification process. The one downside to this type of loan is they will not give to risky borrowers, such as those with bankruptcy. To qualify, you have to establish a new credit record and the bankruptcy has to be two years or more in the past.

Conclusion

Before you look for a mortgage to finance your bungalow, have a realistic budget in place. Know what you can afford to pay each month. Even if you get approved for a $300,000 mortgage, do not look for a bungalow in that price range if you cannot afford the monthly payment. Also, make sure you have a down payment of at least 15%.