If you are shopping for a home then you will likely also need to be shopping for a mortgage loan. There is no one-size-fits-all loan. How long you plan to stay, where you live and other variables can make different home loan options better suited for you. Choosing wisely can help you save on your down payment, interest and fees.
This is the most common mortgage type. These loans can be 15 to 30 years. It’s best for those that want predictability and aren’t going anywhere soon. For your payment, you will pay a certain amount for a certain number of years.
These loans do require a down payment. Depending on how much you put down, you may be required to have mortgage insurance.
Unlike fixed rate mortgages, these have mortgage interest rates that are usually lower than you would get with a fixed rate mortgage. However, the interest rate and monthly payments can adjust to go along with the current market rates.
If the interest rate rises so do your monthly payments. Homebuyers with lower credit scores are best suited for these types of mortgage since these people can’t usually get a good rate on a fixed rate loan.
These loans don’t require as large a down payment as other types of loans. The Federal Housing Administration backs these loans.
These loans are best for those without a lot of savings for a down payment. There are still several requirements that you will have to meet. These loans don’t provide a lot of flexibility, but they are fixed rate mortgages.
These loans are for those that serve in the United States military and can be a good alternative to other conventional loans. If you do qualify then you may not have a down payment and there aren’t any mortgage insurance requirements.
Certain people will qualify for these loans. Since these loans are government backed, there will be certain restrictions. For example, the home needs to meet some minimum requirements and it needs to be your primary residence.
A USDA home loan is another government-sponsored home loan and is designed for families in rural areas. The government finances 100% of the home price for properties that are eligible. There is no down payment required and there are discounts on mortgage interest.
These loans are right for those that are struggling financially and can find a property that meets requirements. There is a catch. The debt load can’t exceed your income by 41% and you are still required to have mortgage insurance.
These are also known as gap loans and these loans can be good option if you are working on purchasing a home while selling your current home. Lenders then wrap your current mortgage with your new one.
Once the home is sold you will pay off that mortgage and refinance. These loans are good for homeowners that have a low debt-to-income ratio and excellent credit. You also can’t be financing more than 80% of the homes’ combined value.