Buying a home soon? Be sure to weigh your mortgage options! There are multiple loan types to choose from and it’s important to select one that fits your needs and situation. While your loan officer will be your best resource for this decision, the infographic and article below can act as a simplified explanation of the most common mortgage options. Keep reading to learn more!
VA loans
If you are currently in the United States military, or if you have ever served in the U.S. armed forces, you may be eligible for a Veterans Affairs (VA) loan backed by the U.S. government. You can even qualify if you are an unmarried surviving spouse of a veteran who died during active duty. VA loans are very popular with those that qualify because you may be able to purchase a home with little or no down payment and monthly mortgage insurance is not required. Learn more
USDA loans
Low- to moderate-income applicants in eligible rural areas may qualify for a loan guaranteed or provided by the U.S. Department of Agriculture (USDA), which requires little to no down payment. Additionally, USDA financing typically accepts lower credit scores from applicants. Learn more
FHA loans
For homebuyers who don’t qualify for VA or USDA loans, benefits such as lower down payment and credit score requirements draw them to Federal Housing Administration insured mortgages (FHA loans). With this loan type, you typically only need to put 3.5% down and may receive a bit more forgiveness regarding your credit history, making it a popular financing choice for first-time and returning homebuyers alike. Learn more
Conventional loans
Conventional mortgages are not obtained under a government insured or guaranteed program like FHA and VA loans. Because they often require higher credit scores than those government programs, buyers may enjoy lower interest rates with this mortgage type. Conventional loans also typically require a minimum down payment of 5%, although this can sometimes be as low as 3%. Read more about the differences between FHA and Conventional loans here.
Fixed rate or adjustable?
It’s an age-old mortgage question that’s a little bit like asking “should I buy a car or lease one?” The answer depends on your situation and preferences.
Fixed-rate mortgages tend to be popular among homebuyers looking to stay in the same home for a long period of time. The rate is fixed and the monthly principal and interest payment is consistent for the entire life of the loan. Many people find this option comforting because they know what to expect and won’t be hit with interest rate hikes down the road.
ARM loans can also be a great option, depending on your circumstances. For one thing, the initial interest rate tends to be lower. Those who move frequently can save a lot with this option. For example, if a homebuyer opts for a hybrid ARM with an initial “fixed period” of five years and moves three years later, that buyer enjoyed the lower rate for the entire time they were in the home. The lower payment every month can add up to big savings.
Need expert advice to help you make the tough mortgage decisions? An experienced loan officer can help. Contact HomeAmerican Mortgage Corporation today: 866.400.7126.
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HomeAmerican Mortgage Corporation’s principal offices are located at 4350 S. Monaco Street, Suite 100, Denver, CO 80237 (NMLS Unique Identifier #130676; NMLS Consumer Access website: http://www.nmlsconsumeraccess.org), 866.400.7126. In Nevada, all advertised loans are offered and funded by HomeAmerican Mortgage Corporation, 770 E. Warm Springs Road, Suite 250B, Las Vegas, NV 89139, 702.638.4450, License #67.
