First Time Home Owner: Types of Home Loans
Posted by Eric Skates on
When you start looking for a home, the whole process can be quite confusing. There are many different home options that are available. Once you find the perfect home, you have to figure out how you want to fund it. Since most people aren't able to buy a home outright, they need to find the right loan for them.
So, what types of loans should you consider? Here are some of the types that we offer:
Conventional loans can be a good loan for many people. However, they are strict on their requirements, and they often require a higher down payment. This is because the lender is assuming the risk of lending you money for a home.
There are two types of conventional loans. A fixed-rate mortgage allows you to know exactly how much money you are going to owe every month. Your payments aren't going to change so you can budget for your mortgage every month.
If you aren't going to stay in your home for long, you may want to consider an adjustable-rate mortgage. Known as ARM, these loans change as the interest rates change. If the rates go down, you may have to pay less, but you may also get stuck with a higher payment if interest rates go up.
FHA loans are popular for people who don't qualify for a conventional loan. They don't require a large down payment, and you can even finance your closing costs (which makes the amount of money that you need at settlement even less.)
They are a great alternative for people with good credit that don't have a large income and cash readily available for settlement. They also are more affordable, with lower monthly mortgage insurance premiums (which automatically cancel after a few years).
USDA home loans.
USDA home loans are great for those who qualify. They offer one hundred percent financing with fixed-rate mortgages. You can even finance your closing costs so you won't owe anything upfront! They also offer competitive interest rates for those who qualify.
So, how can you qualify? You must purchase a home in an eligible rural area and must meet certain property criteria. You must also have a certain income in order to get a USDA home loan.
If you are a member of the military (or even a veteran), you may qualify for a VA home loan. These offer money-saving benefits such as lower interest rates, no mortgage premiums, low down payments, and much more. You may be able to qualify for a VA loan easier than some of the other options.
In order to get a VA loan, you have to have served at least ninety consecutive days on active duty during wartime or one hundred and eighty-one consecutive days during peacetime. You may also qualify if you spent at least six years in the National Guard or Reserves. If you are a spouse of a veteran who died in the line of duty, you may also be able to qualify and apply for a VA loan.
VA loans offer one hundred percent financing with no mortgage insurance. You may also qualify for grants which will help make your new home more affordable.
If you are looking at a more expensive home and are struggling to get a traditional loan, you may need to look into a jumbo loan. You can get loans that exceed four hundred and fifty thousand dollars if you have a high credit score and very little debt. These loans can also be used for a vacation home and even investment properties.
Equity Prime Mortgage offers even more home loan options.
We're proud to offer Fannie Mae, Freddie Mac, Ellie Mae loan options in addition to niche products like ITIN Loans, Bank Statement Loans, Downpayment Assistance, Doctor Loans and more. Visit our prequalification page to start your loan journey or call us toll-free at (877) 255-3554.