Only about 10 to 20% of the people who buy homes each year pay for them outright with cash. Almost everyone else is forced to take out a home mortgage loan when purchasing a property.
If you’re going to be buying a home soon and applying for a mortgage home loan so that you’re able to do it, it’s going to be important for you to take out the right one. There are lots of different types of home mortgage loans that you can take out.
You can make the process of getting a home mortgage loan simpler by applying for the right kind of loan. You can also make sure that you won’t be spending more than you should have over time by utilizing a home loan mortgage calculator.
Here are some of the most popular types of home mortgage loans available right now.
More often than not, those who are looking for a good home mortgage loan should consider trying to get a fixed-rate mortgage. You can find both 15-year and 30-year fixed-rate mortgages out there.
As its name would suggest, a fixed-rate mortgage is going to be a mortgage that has the same rate over the life of your loan. You won’t have to worry about the rate going up or down at any point.
People have come to appreciate the predictability of fixed-rate mortgage loans. They know exactly how much they’re going to have to pay month after month and aren’t ever caught off-guard by unpleasant surprises.
Wondering where to get a loan with a fixed rate? These days, it’s become easy enough to Google “home mortgage loans near me” and apply for an online home mortgage loan in just minutes.
While fixed-rate home mortgage loans are probably the most popular ones of the bunch, some people have also come to appreciate adjustable-rate mortgages. These kinds of home mortgage loans have interest rates that adjust over time.
Typically, an adjustable-rate mortgage will start off with a low-interest rate for the first few years, and then that interest rate will go up or down each year from there. This makes them an ideal home mortgage loan for anyone who doesn’t plan on living in a home for very long or for anyone who suspects that their interest rate could dip in the near future if they play their cards right.
It can be challenging for those with lower credit scores and/or lower incomes to be able to afford to buy a home. The Federal Housing Administration has stepped in to help these people by offering what are called FHA home mortgage loans.
Unlike fixed-rate and adjustable-rate mortgages that both call for homebuyers to make a sizable down payment in most cases, those using an FHA mortgage to buy a home can put down as little as 3.5% for a downpayment. They can also qualify for an FHA mortgage with a credit score that is in the 500 range.
The one big downside of FHA mortgages is that they do require people to pay for mortgage insurance. But this could be a decent trade-off for those who might not be able to buy a home otherwise.
Anyone who served in the military at any point is entitled to VA home mortgage loans, which are backed by the Department of Veterans Affairs. They’re designed to help veterans buy homes after serving their country.
Many benefits come along with VA mortgages, including:
- They don’t require a downpayment
- They don’t force people to pay for mortgage insurance
- They often have low-interest rates
But of course, they’re not going to be an option for anyone who didn’t spend time serving in the military. They also don’t always have the best interest rates in town, which is why some former military members choose not to apply for them even though they’re eligible to get one if they want.
USDA mortgages are another kind of home mortgage loan that isn’t available to everyone. Backed by the U.S. Department of Agriculture, they’re set up to help those in rural areas get their hands on the funds that they need to buy homes.
But if you’re able to qualify for one, USDA home loans are great because they don’t require a down payment in most cases. They can also be combined with home improvement loans and grants that will allow you to make improvements to a house right away.
There are some income limits and property value caps that might prevent you from getting access to USDA mortgages, though. It’s something to keep in mind if you think you may want to use one to purchase a home.
Anyone buying an especially expensive home might not be able to get a traditional home mortgage loan for it. They could be required to try and qualify for what is known as a jumbo mortgage.
Jumbo mortgages come with both fixed and adjustable interest rates. But in order to get one, you’re often going to need to have a credit score that is above 700. You’ll also usually have to put down a downpayment that is worth at least 10% of the value of a home, if not more.
These qualifications can make it difficult for many people to obtain jumbo mortgages so that they can purchase pricy homes.
Find the Right Home Mortgage Loan and Apply for It Today
Now that you know about the different types of mortgages, you should think about which home mortgage loan is going to be right for you. The one that you choose to apply for should give you the best chance of being approved for a loan.
If you’re still confused as to which home mortgage loan you should choose, speaking with a mortgage lender might be helpful. They can talk to you about what each individual type of loan has to offer to you based on your current circumstances. You can also read more about buying a home on our blog. Check out our other articles for more useful tips and tricks on purchasing a new property.