When you are looking to buy a home, it is important to know which type of mortgage loan is best for your situation. There are different types of loans that can be used for purchasing a home.
1: Conventional Home Mortgage Loans
Conventional home mortgage loans are generally easier and faster to get than alternative types of loans. The most common conventional loan is a fixed-rate mortgage. This type of loan has a set interest rate, which you will pay from month to month. There are also variable-rate mortgages, which have an interest rate that can change over time. With a conventional home mortgage, you may be required to put down a small down payment, and you may also receive government incentives for taking out a fixed-rate mortgage.
2: Fixed-Rate Home Mortgage Loans
Fixed-rate home mortgage loans are one of the most common types of home loans. A fixed-rate home mortgage loan is a loan that has a set interest rate throughout the duration of the loan. This means that the interest rate on a fixed-rate home mortgage loan will not change over the life of the loan. Fixed-rate home mortgage loans are often less expensive than adjustable-rate home mortgages, and can be a good option for people who want to avoid fluctuations in their monthly payments.
3: Adjustable-Rate Home Mortgage Loans
Adjustable-Rate Home Mortgage Loans offer borrowers a more flexible borrowing option, as home loan mortgage rates can adjust up or down over time, based on market conditions. This type of loan can be beneficial to borrowers who may need more affordable financing options during times of volatility in the market, but may be less desirable for those who plan to keep their loan for an extended period of time.
4: Interest Only Mortgages
Interest only mortgages are a type of mortgage in which the borrower pays only the interest on the loan, rather than the principal. This can be an attractive option for people who want to keep their monthly payments low, but may not have enough money available to pay off the entire loan at once. Interest only mortgages typically have longer terms than traditional mortgages, so they could be a good option if you plan to stay in your home for a while.
5: 30-Year Fixed-Rate Mortgages
Fixed-rate home mortgages have long been a popular choice for homeowners looking to lock in their rates. Withdrawing from a fixed-rate mortgage can be more difficult than with a variable-rate loan, but they’re typically less risky and provide more stability over the life of the loan. 5: 30-Year Fixed-Rate Mortgages are available in many different terms, including standard, jumbo, and ARM. The standard term offers a fixed rate for 30 years with no points or fees, while the jumbo term offers a slightly higher rate but with greater borrowing limits. Those interested in an adjustable-rate mortgage should consider an ARM; these loans offer borrowers the ability to adjust their rate monthly, though there is usually an adjustment fee associated with this type of loan.
6: 15-Year Fixed-Rate Mortgages
Fixed-rate mortgages are often favored by those who want stability in their borrowing costs. A fixed-rate mortgage is fixed for a period of six or fifteen years, and the interest rate on these loans remains the same throughout that time. This can be a good choice for someone who wants to lock in a low interest rate, or who anticipates that interest rates will remain low for the duration of the loan.
These are some of the most common types of home mortgages that are available today. It is important to choose the right one for your situation, as not all mortgages are created equal.