Getting to Know Your Loan Options for Buying a House

Are you shopping for a home? If so, you are probably also looking into the various mortgage options. Thanks to all the products available, and the competitive lending market, regardless of your financial situation, it is likely you can find the perfect loan product for your needs.

Before you get started, it’s a good idea to learn about some of the most popular lending options available.

The Fixed Rate Loan

This is the most common type of conventional loan. With a fixed-rate loan, you have a single monthly payment and interest rate for the loan’s life, which will typically range between 15 and 30 years. One variety of the fixed-rate mortgage is called a jumbo lane.

Adjustable-Rate Mortgage

Unlike a fixed-rate mortgage, an adjustable-rate mortgage, or ARM, provide lower interest rates than why you receive with the fixed-rate mortgage mentioned above. However, this low-interest rate is only guaranteed for a certain amount of time, such as five or 10 years. Once the time period expires, the monthly payments and interest rates will vary, usually once a year, based on the current interest rates.

FHA Loan

Most home loans require you to have a down payment of at least 20 percent of the home’s purchase price. However, when you apply for an FHA (Federal Housing Administration) loan, you’re able to put back as little as 3.5 percent. That’s because the FHA loans are government-backed.

USDA Loan

Another type of government-sponsored home loan is from the USDA. The USDA Rural Development loan is designed for those who live in rural areas. Another loan that also serves families in rural areas is the 514Loan. However, with the USDA loan, the government will finance 100 percent of the price of the home. This means no down payment is needed and you receive discount interest rates.

The Bridge Loan

Also referred to as a gap loan or even called “repeat financing,” the bridge loan is a great option if you want to buy a home before you sell the one you currently own. With this lending option, your lender will add the new loan to the existing one, which is more convenient than having two mortgages to pay.

As you can see, there are several options to consider if you are ready to buy a home. Kee the information here in mind to see what type of loan will best suit your needs and the aspirations you have to be a homeowner.