Choose The Right Mortgage For You
Posted on: 27 December 2018
Not too long ago, mortgages only came in two or three flavors. You had a choice between a conventional bank mortgage or a government-backed loan product. Now, you can be forgiven for being confused about the wide array of mortgage loan choices. Great care should be taken when applying for a mortgage of any type since your monthly payments, interest rates, and more all rest on the mortgage details. Read on for a summary of the many different mortgage products so that you can choose the right one for you.
Fixed Rate Loans
As you might expect, this type of loan gives applicants a set amount to pay each month and the interest rate will only change if you refinance the loan at a lower rate. Within this large category, there are several choices.
Conventional – Perhaps the best-known type of mortgage is the traditional and most often-used choice. The only variation you will find with conventional mortgages are the terms. What used to be strictly a 30-year term only offering is available in a variety of lengths from 5 to 50 years.
VA – The Veterans Administration offers those who are serving (or have served) their county an opportunity to be approved for a mortgage with no down payment necessary. This loan is government-backed and guaranteed.
FHA – The Federal Housing Administration offers two different loan products targeting those with lower credit scores and a reduced requirement for a down-payment. The FHA loan is also a government-guaranteed product.
USDA – Similar to the FHA loans in that they target those who don't have good credit or a big down payment, these loans are aimed at populating areas outside of urban city centers.
Non-fixed Rate Loans
Adjustable Rate – This type of loan has a fluctuating payment structure that changes periodically.
Interest Only Mortgages – This loan allows applicants to pay only the interest for a period of time. Homebuyers that are expecting to have an improved financial situation in the future may be interested in this type of mortgage. After a specified period of time paying only the interest on the loan, a balloon payment or a regular mortgage payment each month are options.
Hybrid Loans – These loans often combine several different interest rate options where fluctuations are interspersed with periods of fixed-rate payments.
Piggyback loans – This type of mortgage usually involves more than one loan at a time. Often the down payment is financed separately and the loans can be fixed or adjustable rate.
To find your dream home and get started with the mortgage process, speak to a realtor as soon as possible.
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