Loan Options
30 Year
The traditional 30-year fixed-rate mortgage has a
constant interest rate and monthly payments that never change.
This may be a good choice if you plan to stay in your home for
seven years or longer. If you plan to move within seven years,
then stable-rate loans are usually cheaper. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.
15 Year
This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, and you’ll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment since the difference in interest rates isn’t that great.
Adjustable Rate (ARMs)
Unlike fixed rate mortgages that have an interest rate that remains the same for the life of the loan, the interest rate on an ARM will change periodically. An ARM maybe a good option to consider if you plan to own your home for only a few years; you expect an increase in future earnings; or, the prevailing interest rate for a fixed mortgage is too high. Most homeowners get into adjustable-rate mortgages for the lower initial payment, and then usually refinance the loan when the fixed period ends. At that time, the interest rate becomes variable, or adjustable, and the homeowner would likely refinance into another ARM, something fixed, or sell the home outright.
*There is no guarantee the loan can be refinanced in the future.
FHA
An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, the federal government insures loans for FHA-approved lenders to reduce their risk of loss if a borrower defaults on their mortgage payments. The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable. Typically, an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low-down payment and you can have less-than-perfect credit.
VA
A VA loan is a mortgage loan in the United States
guaranteed by the U.S. Department of Veterans Affairs (VA). The
loan may be issued by qualified lenders. The VA loan was
designed to offer long-term financing to eligible American
veterans or their surviving spouses (provided they do not
remarry). There are many benefits, as taken directly from the
Veterans Affairs site: no down payment required (unless
required by the lender or the purchase price is more than the
reasonable value of the property); buyer informed of reasonable
value; negotiable interest rate… and more.
Jumbo
USDA
The United States Department of Agriculture (USDA)
gives out a variety of loans to help low- or moderate-income
people buy, repair, or renovate a home in a rural area. There are many benefits, including: no down payment required; borrowers who qualify for a USDA Rural Development home loan have the flexibility to pay nothing out of pocket for a down payment. Additionally, the USDA Loan allows borrowers to use a gift or grant to go toward their mortgage.
Reverse
A reverse mortgage is a unique loan product that
allows homeowners, ages 62 and older, to convert a portion of
their home equity into cash. While the senior remains in their
home, there are no required mortgage payments. Conversely,
the lender makes payments to the senior! The cash can be used
for monthly living expenses, medical costs, or to simply add to a
nest egg. The senior is still responsible for taxes, insurance,
home maintenance and any homeowners’ association fees, but
that’s it.
