Sawyer Home And Land, LLC

5 Home Loan Options to Explore

by Karyl Sawyer 03/22/2020

Image by StockSnap from Pixabay

One of the most important factors of the home buying experience is the mortgage loan you undertake. With at least eight different types, there are five that are the most common. The following types of mortgage loans are the ones held by most homeowners in the United States. 

1. Conventional Mortgage

A conventional mortgage is the standard mortgage that comes to most people's minds when they think about qualifying for a loan. Distinguished because of their fixed interest rate and consistent monthly payments, conventional mortgages are available in terms ranging from 10 to 40 years with 15 and 30-year loans the most common. 

2. Adjustable-Rate Mortgage

An adjustable-rate mortgage might also be referred to by its acronym: ARM. There are a number of different types of ARMs but their basic premise is the same. The interest rate tied to the mortgage fluctuates according to factors like changes in the cost of borrowing money and other economic factors. The 5/1 loan is a common type of ARM. The interest rate charged on the loan remains the same over the first five years of the loan. For the remaining 25 years, the interest rate can change. 

3. Interest-Only Mortgage

An interest-only mortgage can be a valuable economic tool but it's best undertaken by those who understand its implications. During the first 5 or 10 years of an interest-only mortgage, you can opt to pay only the interest on the loan. You aren't obligated to pay only the interest during that time. After the first 5 or 10 years, the loan is treated like its a conventional mortgage. 

4. VA Loans

VA loans are backed by the federal government, overseen by the Department of Veteran Affairs and don't require a down payment. These loans are limited to members of the military. In some cases, spouses can take advantage of VA loans. 

5. FHA Loans

Backed by the Federal Housing Administration, FHA loans include mortgage insurance that is built into them. This helps protect the lender in the event that the home buyer cannot repay the loan. FHA loans also have lower down payments which are designed to help more people purchase a home.  

In some cases, a seller might not want to participate in a particular mortgage loan. Your real estate agent is a great source of information about mortgage options, check with them for more guidance.

About the Author
Author

Karyl Sawyer

Business Approach: As your Agent and Broker, my job is to assist you in achieving the goals of your transaction (price, timing, etc..). I will do my best to help you find the right property for you and your family as a Buyer, or present and market your property effectively as a Seller. I have expertise in negotiating the best price and terms, and guide the process and paperwork to a successful conclusion. Unlike many agents I do not represent both Buyer and Seller in the same transaction (dual agency, or double-ending). I cannot effectively give both parties the benefit of my experience if I try to represent both at the same time.