Are you looking to purchase a home and are wondering what type of mortgage financing plans are available? There are so many varieties of loans, each one is unique to your situation. The most popular home loans that you hear about are typically:
Conventional Loans: The most common type of loan, a fixed-rate loan,a single interest rate—and monthly payment—for the life of the loan, which is typically 15 or 30 years. It is also a non-government loan.
Adjustable-rate mortgage loans (ARMs) have an interest rate that will change or “adjust” from time to time. Typically, the rate on an ARM will change every year after an initial period of remaining fixed. It is therefore referred to as a “hybrid” product. A hybrid ARM loan is one that starts off with a fixed or unchanging interest rate, before switching over to an adjustable rate.
FHA Loans: FHA mortgage loan types are insured by the government through mortgage insurance that is funded into the loan. First-time home buyers are ideal candidates for an FHA loan because the down payment requirements are minimal and FICO scores do not matter.
VA Loans: This type of government loan is available to veterans who have served in the U.S. Armed Services and, in certain cases, to spouses of deceased veterans. The requirements vary depending on the year of service and whether the discharge was honorable or dishonorable. The main benefit of a VA loan is the borrower does not need a down payment. The loan is guaranteed by the Department of Veterans Affairs but funded by a conventional lender.
Bridge/Swing Loans: These types of mortgage loans are used when a seller has put a home on the market — but it has not yet sold — and the seller wants to borrow equity to buy another home. The seller’s existing home is used as security for a bridge (also called swing) loan.
USDA Rural Development: These Loans Are designed for families in rural areas. The government finances 100% of the home price—in other words, no down payment necessary—and offers discounted interest rates. Your debt load cannot exceed your income by more than 41%, and, like the FHA loan, you will be required to purchase mortgage insurance.
Check out other pages on “Getting Pre-Qualified vs. Pre-Approved” and ” Top 10 Things You Should Not Buy When Buying or Thinking of Buying A Home”
These are just a few mortgage loans and only provides a brief overview of each type. Contact us TODAY and we will be happy to recommend great lenders that will guide you through smart decisions, as a home buyer or mortgage shopper.