Kinds of Home Loans
The world of lending and finance can be intimidating if not outright confusing. There are different terms and conditions attached to many kinds of home loans from the various banks, lenders, and mortgage brokers out there. TrustLink Mortgage believes in educating the consumer and our customers. Here are some of the different kinds of home loans and home loan options you will encounter.
Fixed-rate mortgages usually come in 15- to 30-year terms. During the loan’s life, the interest rate given will never change because it’s fixed. If interest rates go up or down, yours will remain the same.
Adjustable-Rate Mortgage – ARM
Adjustable-rate mortgages (ARM) are the opposite of a fixed-rate mortgage. The interest rate will change, normally going up, after a set period of time. For example, there’s a 5/1 ARM where the rate is set for five years and increases annually after that.
An FHA mortgage is a home loan that is secured by the Federal Housing Administration. These loans are backed by the government and designed to help people who normally couldn’t qualify for a mortgage to buy a home.
The Department of Veterans Affairs also backs mortgages to military service members and veterans. You must be a former or current armed services member to qualify. These loans offer lower interest rates and don’t require mortgage insurance.
USDA mortgages are backed by the US Department of Agriculture. They don’t require a down payment and have income and property value caps on them. They are ideal for people in suburbs and those looking to buy in rural areas.
Jumbo home loans are for mortgages that are above a certain dollar amount. They are for expensive homes and borrowers with a credit score over 700; in addition, they require a down payment of 10% or higher.
Interest-only mortgages are for people that don’t plan on being in the house for the length of the mortgage. The borrower only pays the interest charges to the lender. These loans are for those with substantial assets and the discipline to make periodic payments on the principle.
Contact us today to find secure your own loan.