Mortgage loans are available in a variety of forms, and it can be daunting to research which type is best for you. To help you decide, Ian Nelson | Real Estate has put together the 4 common types of mortgage loans. So, whether you're a first-time homebuyer or refinancing your current mortgage, read on to learn what's available for you!
A fixed-rate mortgage is a loan in which the interest rate remains the same for the entire term of the loan. It’s ideal for homebuyers who want predictability and stability in their monthly payments. The drawback to a fixed-rate mortgage is that it usually has stricter credit requirements and higher interest rates.
An adjustable-rate mortgage (ARM) is a loan whose interest rate can change based on current market conditions. Typically, it comes with a lower interest rate than fixed-rate mortgage loans. However, it has a higher risk of potential payment increasing if market interest rates go up. As such, ARMs are ideal for people who are buying a starter home and don’t plan to live there for the loan's full term.
Typically, the government isn't a mortgage lender. But it does insure mortgages through entities like the Federal Housing Administration (FHA), the United States Department of Agriculture (USDA), and the Department of Veterans Affairs (VA). These loans can assist you in financing a house when you don't qualify for conventional loans since their credit requirements are more relaxed.
Established by Freddie Mac and Fannie Mae, jumbo loans are those that fall out of the conventional loan limits. They have higher interest rates than conventional mortgages but they can be helpful for buyers who require financing for a more expensive home. However, you'll need to have a high credit rating and low DTI to qualify for the jumbo loan.
Looking for a mortgage? Let us help you!
If you're interested in learning more about the types of mortgages available for home buyers, please reach out to Ian Nelson | Real Estate today! We'd be more than happy to assist you in getting started on the home-buying process. Call (773) 862-0200 to speak to one of our representatives.