You may see discussions about a traditional vs a non traditional mortgage - what are the differences?

A traditional mortgage is commonly known as the fixed rate, fully amortized home loan. For most consumers, the traditional fixed-rate mortgage and adjustable-rate mortgage (ARM) continue to be excellent options despite the availability of more "exotic" loan options. However, even these
traditional financing options carry a number of important decisions.

"Option ARM", mortgage that gives the borrower from month to month the option to make fully amortized payments or to make a small payment, is an example of non traditional mortgages. Option ARM's are ideal for home owners whose income fluctuates from month to month.

It is important to consider your own personal situation prior to deciding upon which type of loan best suits you. Don't choose a traditional mortgage based solely on tradition! So called non-traditional loans are very often much better suited to the realities of today's homeowners, and can provide unprecedented flexibility and options which can very often mean the difference between successfull home ownership or financial ruin.

IF you need to spend more than 40% of your monthly net income (without overtime and after taxes) to cover your mortgage payment, taxes and insurance, or you have less than 6 month worth of mortgage paymentsin the bank or in retirement accounts, please consider what might happen in the event of personal injury or job loss prior to selecting your loan. A non traditional mortgage can offer you lower minimum payments, while still allowing you to use it like a traditional 30 year fixed mortgage under normal circumstances.

 

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