Are you looking for a home loan? Here are a few options that can come in handy.
So, you are about to make your very first house purchase. It is undoubtedly a pleasure to hear that. However, buying a house is expensive, and no matter how much you avoid taking a loan, you will most probably end up taking one. In this article, we will share with you different types of home loans, so you can zero in on the one that suits you the best.
So, let’s begin.
Fixed-Rate Mortgage
One of the most common and safest types of home loans is a fixed-rate mortgage. Potential buyers primarily prefer these home loans because of their consistency. Furthermore, the monthly payment will remain the same throughout your loan’s life. With a fixed-rate loan, you can choose a loan term of 10, 15, 20, 30 or 40 years. However, a loan term of 15 or 30 years is the most popular.
Adjustable-Rate Mortgage
There are different types of Adjustable Rate Mortgages available. The only difference is that their interest rate tends to change with time, throughout the life of your loan. The changes in the rate reflect changes in the economy as well as the cost at which you borrow money. 5/1 loan is the most common type of ARM. During the first five years of having taken this loan, the interest rate remains the same, but during the next 25 years, it changes freely.
VA Loans
If you are a retired veteran of the US armed forces, this loan can come in handy for you and your spouses if you want to purchase a home. These loans are granted by the department of veteran affairs and don’t need a down payment.
FHA loans
Next on our list of home loans is the FHA loan. The federal housing association guarantees this type of loan. This type of loan comes with built-in mortgage insurance. This mortgage insurance protects one against the possibility of being unable to pay the loan. Furthermore, in the case of an FHA loan, the required down payments are quite low.
Piggyback Loans
Such a loan is possible if you can put 20 percent as a down payment. Furthermore, in combination with this loan, you need two more loans. This keeps you from paying private mortgage insurance.
Jumbo Loan
As the name suggests, a jumbo loan is too big for your federal government to purchase and guarantee. At the moment, the limit of this loan is somewhere around $700,000. It merely means that if you are a borrower, you won’t get low-interest rates on smaller loans.
