A Guide About Different Types Of Home Loans

by Premiere Financial Premiere Financial

Shopping for the home requires the home loans for the financial safety and security of your property. One must know which type of home loans they should look for and which loan offers the best deals for them. Your location and your total period for staying in the house all make a change in your housing loans.

The housing loans are known as mortgage loans and they have classified into different types; FHA loan, VA loan, Conventional loans, etc.

Let's have a look at the types of mortgage loans and understanding which one is meant for you.

1. Fixed-Rate Loan

This is the most common type of home loan that required single interest rates and monthly payments. The loan period is between 15 years to 30 years, one of the jumbo loan plans. Those who have no plans to shift their house too soon can go for fixed-rate loans, and the rise and fall of the interest rates will not affect your home loan plan.

2. Adjustable-Rate Loan

Adjustable-rate mortgages (ARM) provide you lower interest rates as compared to the fixed-rate mortgages. You have to pay interest rates for the selected time-period according to you, not for life. The payments depend on the interest rates if the interest rates shoot up your monthly payments will also increase. People who have a low credit score or have plans to sell their house sooner can go for ARM.

3. FHA Loan

Mostly mortgage loans required a 20% down payment on the purchase price of the house, but with Federal Housing Administration you can get the down payment at 3.5%. The FHA is a government-backed loan plan, it is the best fit for people who have meager monthly savings. FHA buyers need to pay mortgage insurance if in case you default at paying the monthly loan payments.

4. VA Loan or Veterans mortgage loans

People who are serving in the military or disabled veterans can apply for Veterans mortgage loans or VA loans. The veteran's mortgage loans do not ask you to pay down payments or mortgage insurance. The VA loans are government-backed and require certain years of service in the military. The cost to refinance VA loans is lowest than any other mortgage loan.

These were few mortgage loans that are most common in buyers; bridge loans and USDA loans are some mortgage loans that also provides financing for your dream home.

Choosing the right type of mortgage loan can save you a bundle of time, finance, down payments, and credit score, etc. With the above list of mortgage loans, you will learn about house-buying options that could save your monthly payments.