Are You Considering a US Bank Mortgage? Here’s What You Need to Know
Are you considering a US bank mortgage ? If so, you’re in good company — the demand for these loans is at an all-time high. The reasons for this are obvious: interest rates on conventional mortgages have been declining steadily for several years, leaving many prospective home buyers feeling trapped by stagnant and increasingly expensive loan categories. Americans love their banks and trust their financial services providers more than almost any other sector of the economy; why then, do so many see them as anathema?
US Bank is a considerably smaller bank than its national peers, but it exceeds industry standards in customer service and capitalization (the amount of risk its assets present). It also offers one of the most appealing mortgage products available to American consumers: a low-cost, no-documentation-required mortgage that can be used to purchase existing homes or to build a new home. In other words: It’s perfect for those looking to buy their first house or refinance an existing one without taking on excessive debt.
What is a US Bank Mortgage?
A US Bank mortgage is a loan from a US bank that is not backed by the US government. The loan is issued as a private loan, is insured by the FHA, and is established on a “no documentation required” basis. The loan includes a mandatory upfront fee, but the vast majority of this fee is recovered through lower interest rates on subsequent monthly payments. The loan itself is made up of a combination of interest-only (IO) and pay-back-only (BO) components. The interest-only portion of the loan features a fixed rate, while the BO portion is a variable rate. Because of these components, it’s important to understand how a US Bank mortgage works before deciding whether it’s the right fit for you.
How Does a U.S. Bank Mortgage Work?
A US Bank mortgage has two distinct parts — the interest rate and the monthly payment. The interest rate is the fee charged by the lender for the privilege of financing the property. The payment amount is the total amount of the loan, including the upfront fee and any applicable government fees. The monthly payment is the discrete amount that is due at the end of each month. Payments are due on the first of the month. Because of these details, it’s easy to understand how a US Bank mortgage works and what steps you should take to consider it.
Why Should You Consider a U.S. Bank Mortgage?
The list of compelling reasons to consider a US Bank mortgage is long: No documentation required: Most banks require you to sign a contract when you start a mortgage application that spells out in detail all your financial obligations, including your income and debt- payoff plans. US Bank does not require you to sign a contract like this. Most banks require you to sign a contract when you start a mortgage application that spells out in detail all your financial obligations, including your income and debt- payoff plans. US Bank does not require you to sign a contract like this. Low monthly payment: The low monthly payment required by US Bank may pique you, but realize that you’re paying much less in interest than you would be with a conventional loan. The interest rate reduction and the ability to pay off the loan sooner rather than later make this less of a sacrifice in the long run. The low monthly payment required by US Bank may pique you, but realize that you’re paying much less in interest than you would be with a conventional loan. The interest rate reduction and the ability to pay off the loan sooner rather than later make this less of a sacrifice in the long run. Funding your loan: This is the main reason you should consider a US bank mortgage: The security of a government-backed loan. The more secure your loan is, the easier it is for the bank to support. This is the main reason you should consider a US bank mortgage: The security of a government-backed loan. The more secure your loan is, the easier it is for the bank to support. The ability to choose your own rate: While interest rates on conventional loans have been declining for several years, they remain above market levels. On the other hand, US Bank loans are available at lower rates and come with a variable rate.
When Is a U.S. Bank Mortgage Right for You?
The best time to consider a US bank mortgage is when you’re looking for a low-cost way to fund your purchase. Given the flexibility of the no-documentation-required loan, you can choose a rate that is either lower or higher than the rates you would find on a traditional mortgage. If you select a rate that is higher than normal, consider applying for a special rate that is tied to one of the government-backed financial products: Securities lending trust (S ITV), bank brokerage trust (BGT), or government-sponsored enterprise (GSE).
Conclusion
A US bank mortgage is perfect for those that want to purchase a house but don’t have the cash flow to fund a large purchase upfront. The low interest rate and flexibility of a no-documentation-required loan make this a great option.