Different Types of Mortgage Loans That You Could Potentially Qualify For
4/13/18Whether you're looking for your first home or your third, the mortgage process never gets easy. As time goes on the amount of paperwork and eligibility requirements go up.
If you think there are only one or two types of homeowner loans available, you'd be mistaken. There are multiple types of mortgage loans that you might be eligible for.
Fixed-Rate or ARMA fixed-rate mortgage is a loan with a rate that is consistent throughout the life of the loan. An adjustable-rate mortgage, or ARM, is a loan that sets a static rate for the first five years of the loan and then begins to increase.
A fixed-rate mortgage is usually received for a 30-year or 15-year repayment period. The most common option is the 30 year period due to lower monthly principal payments, although you end up paying more in interest. A 15-year mortgage has much higher monthly principals but you end up saving on interest.
A 5/1 ARM is an adjustable-rate mortgage usually sets a low fixed rate for the first five years but will then increase each year thereafter. This type of loan can be a good choice for those who plan to pay the entirety of their loan off within five years, or for those who don't intend to stay at the house for longer than half a decade.
Government LoansThere are a few government loans that you could potentially be eligible for.
FHA Loans are offered through the Federal Housing Administration and can be a popular choice for first-time home-buyers. You typically don't need a high credit score to obtain an FHA loan, and if you happen to have a score above a certain number then your down payment is reduced significantly. A credit score of 500 can still qualify for a FHA loan with a down payment of 10%, but with a credit score of 589 or higher, you can qualify for the loan with a down payment of only 3.5%.
VA Loans are available for United States Veterans and can provide many financial benefits. They don't require mortgage insurance and don't require a down payment.
There are other government loans such as a USDA loan or an FHA 203K Rehab loan but are less common. You could potentially qualify for any number of these loans and more. To find out what homeowner loans you're eligible for, consult with a lender today.