When it comes to your home, you want to make sure that you are in the best possible position. This means having a good credit score and knowing about all of the different types of mortgage loans available to you. There are tons of ways for someone who is interested in buying a house or refinancing their current mortgage to get help finding the right loan. This article will discuss 6 types of mortgage loans that should be at the top of every prospective buyer’s list. Let’s get started.
Conventional Loan
The most common type of mortgage loan, the conventional loan, is available to almost anyone who qualifies. It’s not limited by restrictions like FHA loans, and there are no limits on how much you can borrow or your maximum monthly payment. If interested in this kind of loan, this website provides further details, including the requirements for getting one. You also need to know if you qualify for the same.
The best part about these mortgages is that they allow for up to a 20% down payment. Of course, this depends on the lender and how much they will allow you to put down on your home purchase. However, it is a loan worth looking into if you are interested in buying a house.
FHA Loans
These mortgages require less than stellar credit to get approved for, but the benefits do not end there. FHA loans also allow borrowers who want to put down as little as three percent on their home purchase, and they don’t charge any mortgage insurance fees either. These loans are perfect for first-time homebuyers or those who want to refinance their current mortgages.
As with conventional loans, FHA loans allow for a 20% down payment. This makes it easier to buy the home of your dreams without having to pay any fees or deal with high monthly payments. However, you will need to keep in mind that FHA loans are only available to those who meet certain criteria.
VA Loans
Short for Veterans Affairs Loans, these mortgages are especially beneficial to those who have served in the military at some point during their lives. This type of loan is perfect if you’re looking into buying a home and don’t want to deal with paying mortgage insurance or making large down payments on your purchase.
Another benefit of VA loans is that they require a credit score of at least 620 to qualify for them. In addition, the loan is guaranteed by the Department of Veterans Affairs, and they will allow you to make a down payment as low as zero percent on your home purchase. However, certain restrictions come with this type of mortgage.
Jumbo Mortgage
Jumbo mortgage wholesale lenders are just what they sound like: loans that exceed the conventional loan limit. These mortgages can be used to finance a home purchase or refinance an existing mortgage for those who want to borrow more money than is allowed with most other forms of financing.
As you might expect, jumbo loans require high credit scores, and they have a maximum loan-to-value ratio of 85 percent, which means that you cannot borrow more than 85% of your home’s value. In addition, borrowers also need to go through an approval process to determine their eligibility for this type of mortgage, and there are certain fees associated with them as well.
USDA Loans
Also known as the USDA home loan, these mortgages are perfect for those who want to buy a house and need help with their down payments. This type of loan is available to first-time homebuyers or those who haven’t owned a property in at least two years.
To qualify for this type of mortgage, you will have to meet specific income requirements. It’s also important to know that the loan only allows for a maximum of one-unit properties, which means you can’t use it to buy more than one home at a time.
Interest-Only Mortgage
This type of loan is another alternative for those who need a little help with their down payments. The interest-only mortgage requires you to pay only the interest on your home purchase, but not its principal balance. This product works just like any other home financing option out there. You will also need to go through an approval process, so be prepared for that.
Although there are some benefits of this type of mortgage, it is essential to remember that you will have to pay back the principal balance after a certain period passes by. This means that your monthly payments might increase significantly in the future, and you should also keep in mind other potential fees that can come with this type of loan.
There are many different types of mortgage loans you can take advantage of. Each one has its pros and cons, but it’s essential to do your research before applying for them so that you know exactly what you’re getting yourself into. Choose a mortgage that works best for you and your goals.
