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<\/figure><\/div>\n\n\n\nRead more to learn which type of home loan is right for you.<\/p>\n\n\n\n
Which type of home loan is right for you?<\/h2>\n\n\n\n
There are many different home loans. Conventional loans, FHA loans, VA loans, fixed-rate loans, adjustable-rate mortgages, bridge loans, etc.<\/p>\n\n\n\n
Each may require certain down payments or specific loan amount, mortgage insurance, and interest standards.<\/p>\n\n\n\n
Fixed-rate loans vs. adjustable-rate loans<\/h2>\n\n\n\n
A fixed-rate loan is the most common type of conventional loan. It has a single interest rate and monthly payment for the life of the loan, which is typically 15 or 30 years.<\/p>\n\n\n\n
You pay X amount for Y years for your mortgage. This loan will require a down payment, and the rise and fall of interest rates will not affect the terms of your loan.<\/p>\n\n\n\n
It\u2019s perfect for homeowners who crave predictability and don\u2019t plan on moving anytime soon.<\/p>\n\n\n\n
Unlike fixed-rate mortgages, adjustable-rate mortgages offer fixed-rate mortgage interest rates for some time, whether 5 or 10 years.<\/p>\n\n\n\n
After that, your interest rates and monthly payments will adjust corresponding to current interest rates.<\/p>\n\n\n\n
Homebuyers with lower credit scores are best suited for an adjustable-rate mortgage. This is because people with poor credit cannot get a reasonable interest rate on fixed-rate loans.<\/p>\n\n\n\n
It\u2019s also great for people who plan on selling their home before their fixed-rate period is up. However, the monthly payment can fluctuate.<\/p>\n\n\n\n
FHA loan<\/h2>\n\n\n\n
Most home loans require a 20% down payment of the purchase price of your home. With a Federal Housing Administration (FHA) loan, you can put down as little as 3.5%.<\/p>\n\n\n\n
This is because FHA loans are government-backed.<\/p>\n\n\n\n
Homebuyers with little savings for a down payment make a good fit for an FHA loan. However, keep in mind that FHA loans have several requirements.<\/p>\n\n\n\n
They\u2019re limited to $417,000 and don\u2019t provide much flexibility for most. They\u2019re fixed-rate mortgages, with either 15- or 30-year terms.<\/p>\n\n\n\n
Buyers with FHA loans will also have to pay mortgage insurance, which is approximately 1% of the cost of your loan amount.<\/p>\n\n\n\n
VA loan<\/h2>\n\n\n\n
Veteran Affairs or VA loans can be an excellent alternative to a conventional loan. You can get a home with no down payment and no mortgage insurance requirements.<\/p>\n\n\n\n
VA loans are for veterans who\u2019ve served 90 consecutive days during wartime, 180 during peacetime, or six years in the reserves.<\/p>\n\n\n\n
Because they are government-backed, they also have strict requirements. It must be your \u201cprimary\u201d residence and meet the \u201cminimum property requirements\u201d.<\/p>\n\n\n\n
USDA loan<\/h2>\n\n\n\n
Another government-backed loan is a USDA Rural Development loan. This type of loan is designed for families in rural areas.<\/p>\n\n\n\n
The government will finance 100% of the home price for USDA-eligible homes. Borrowers who are struggling financially in rural areas can access USDA-eligible home loans.<\/p>\n\n\n\n
They are designed to place homeownership in their grasp, with affordable mortgage payments.<\/p>\n\n\n\n
But there\u2019s a catch \u2013 your debt load cannot exceed your income by more than 41%, and, as with FHA, you will be required to purchase mortgage insurance.<\/p>\n\n\n\n
Bridge loan<\/h2>\n\n\n\n
A bridge loan is also known as a gap loan or \u201crepeat financing.\u201d It\u2019s a great option if you purchase a home before selling your previous residence.<\/p>\n\n\n\n
Lenders will wrap your current and new mortgage payments into one. And once your home is sold, you pay off that mortgage and refinance.<\/p>\n\n\n\n
This is perfect for homeowners with excellent credit and a low debt-to-income ratio who don\u2019t need to finance more than 80% of the two homes\u2019 combined value.<\/p>\n\n\n\n
When in the market to buy a home, there are many different home loans to choose from. Be sure to research and determine which loan is right for you.<\/p>\n\n\n\n
SOURCE<\/a><\/p>\n\n\n\n S&D Real Estate Services, LLC
2000 E. Edgewood Drive; Suite 103
Lakeland, FL 33803-3600<\/p>\n\n\n\n