5 Mortgage Loans You Can Consider For Your Home Purchase

Finance & Money Blog

You should choose the best mortgage loan for your home purchase. However, you may be unsure of the best mortgage loan type that meets your budget and needs. Therefore, discover five types of mortgage loans for your mortgage home purchase.

Conventional Mortgage Loan

You can acquire this type of loan from a non-government-backed program lender. It is one of the most common mortgage loans and comes in two packages; conforming and non-conforming.

The conforming loan meets the Federal Housing Finance Agency (FHFA) standards, including the credit, debt, and loan size. On the contrary, non-conforming loans don't meet these standards and are ideal for larger homes.

Fixed-Rate Mortgage Loan

This mortgage loan has a single interest rate that stays consistent over the entire loan period. In this case, the interest rate won't change, regardless of the changing economic factors such as inflation.

One of the main benefits of this mortgage is that it is easier to budget for your payment because it remains consistent. Also, you don't have to worry about repayment fluctuations because the interest rates don't go up.

Adjustable Rate Mortgage Loan

Unlike the fixed rate mortgage loan, this type of loan fluctuates much more, which means your payment also changes with time. Therefore, this loan is ideal if you plan to sell or refinance your home. It is also preferable because it has a lower interest rate than the fixed rate loan, especially at the beginning of the loan.

Government-Insured Loan

This loan is ideal if you have a lower credit score and don't have a lot of cash for a down payment. You can select from mortgages backed up by the government, including the Federal Housing Administration (FHA) loans, the US Department of Agriculture (USDA) loans, or Veterans Affairs (VA) loans. You should consider these loans if you don't qualify for a conventional loan or are a repeat buyer. 

Jumbo Mortgage

Jumbo mortgage loans refer to any loan beyond standard mortgage programs' limits. It is ideal if you want to purchase expensive properties in areas with a high cost of living. However, you need a better credit score and a high income for approval.

You should ensure you get a suitable mortgage lender if you're getting a mortgage loan. First, consider the options above to identify the most suitable mortgage loan that actualizes your homeownership dream. However, if still unsure of which option to go for, contact a local mortgage lender to assist you in deciding. Keep these mortgage loan tips in mind when looking for a local service.


29 July 2022

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