There are several home loan programs available for you. Each option will provide terms that may or may not best suit your current financial situation. Before applying for your loan, you should do the due diligence and evaluate your options.
Consider the individual benefits each program provides, including eligibility requirements, payment options, interest rates and costs.
Begin by considering your current financial situation and where you will find yourself in the next 5, 10 and 15 years. You will need to answer several questions before selecting the ideal type of loan and the specific loan program. Each has its unique benefits, and with a comparison, you'll find the right one.
Consider Your Finances:
Now Ask These Questions:
The fixed-rate mortgage is the staple loan product of the lending industry and is by far the most popular selection by home buyers. The contract locks in your low-interest rate for a particular length of time, eliminating the variable movement of interest rates year by year. This is the most secure option, and you may select a length of time that best suits your plans for the future.
Adjustable-rate mortgages begin with fixed interest rates for several years and, dependent upon the terms of the loan, the interest rate will begin to increase each year.
The increase of interest rates are dependent on market rates for that year. Monthly payments will change regardless of your ability to cover increased costs in the future. The benefit is that you will have a few years with low-interest payments, but you're placing all bets on salary improvement within a few years. The introductory rate is typically much lower than fixed interest rate terms at the time you lock in your loan.
The benefit comes with risk, as you can refinance into a fixed-rate mortgage before your interest rates reach unreasonable levels. However, success for this approach is dependent upon the volatility in our economy, current mortgage rates, and your financial circumstance.
The nonconforming options are one year, five year, seven year and ten year ARM loans, and you select the payment options that you prefer.
ARM Loan Payment Options:
The Federal Housing Administration insures mortgage loans to ensure affordable options for home buyers. FHA loans have taken the market share in our mortgage market as the leading loan program. The relaxed requirements and beneficial financing options have made FHA the ideal choice for first-time buyers and low to middle-income classes.
Advantages to Consider:
Disadvantages to Consider:
Conventional loans are not insured by the Federal government directly. However, they can be bought in a secondary mortgage market by government-sponsored agencies, referred to as Fannie Mae and Freddie Mac.
The ability for a lender to sell the "risk" of you defaulting on your loan, mostly keeps interest rates reasonable and down payment requirements low. Conventional loans can be non-conforming, which are above loan limits set by Fannie and Freddie, more specifically for wealthier individuals purchasing luxury homes. There is a variety of customizable loan options available, along with several benefits.
Advantages to Consider:
Disadvantages to Consider:
Didn't find the answer you wanted? Ask one of your own.
Ask our community a question.
Searching Today's Rates...
Featured Lenders