There are different forms of mortgages that are available depending on your individual circumstances. Here is some key information on several of the five most common types. Speak with your chosen loan professional about the best options for you. Each loan type has its pros and cons and your lender will review these with you to ensure the best choice is made.
Your interest rate remains constant for the life of your loan. Many borrowers prefer this type of mortgage loan because there are no surprises and it makes the budgeting of monthly expenses easier. The interest rate can be higher on these loans, but you will not have the fluctuating mortgage payments that come with some other loan types.
Your interest rate for an ARM loan (also known as a floating or variable rate loan) will be fixed for some time. After this initial period is over, the rate will vary throughout the remainder of the loan’s life. There are limits as to how much the loan’s rate can increase each year. An ARM is a good option for those who plan to pay off their loan early, move before the rate adjusts, or for those who are financially tolerant to rate adjustments.
You can have a fixed or adjustable rate (ARM) with this loan type. Loan terms typically are between 10-30 years. A fixed-rate might be the most favorable option if you plan to stay in your home for a number of years. If you do not plan to stay long-term, an ARM gives you lower monthly payments in the first few years but does increase after that period. If you have a FICO score of 740 or higher and at least a 5% down payment, a conventional loan may be the way to go.-
The Federal Housing Administration (part of HUD) insures the loan which enables your lender to provide you with the best possible terms.
First-time homebuyers find this option appealing because of its pros:
A portion of this loan is guaranteed through the United States Department of Veteran Affairs. According to the department’s website, a VA loan helps Veterans and qualified surviving spouses become homeowners. Since a portion of this loan is guaranteed, it helps your lender to give you better terms.
