Homebuyers have access to a range of mortgages. Finding the right loan for your situation can help you achieve homeownership and save money in the long run. It’s essential that you comprehend all requirements associated with each type of mortgage so you can make an informed decision.
Fixed-Rate Mortgages – This type of mortgage is the most popular, offering a single interest rate for the duration of the loan – typically 15 or 30 years. Many homeowners prefer this option due to its consistency and peace of mind throughout the duration.
Adjustable Rate Mortgages (ARMs) – Adjustable rate mortgages (ARMs) carry more risk than fixed-rate loans due to their variable monthly payment amounts. However, you may qualify for a lower interest rate on an ARM than with a fixed-rate loan.
5-Year Fixed-Rate Mortgage – This mortgage offers the stability of an interest rate for five years, making it ideal for first-time buyers who want to save money over time by making payments more manageable.
20-Year Fixed-Rate Mortgage – Similar to the 30-year mortgage, this loan features a fixed interest rate for the entirety of its duration. It’s ideal for homeowners since they get consistent monthly payments and save money in the long run by paying off their homes more quickly.
15-Year Fixed-Rate Mortgage – This mortgage offers an interest rate that is typically lower than a 30-year loan, making it suitable for homeowners with lower incomes who cannot afford large down payments on homes or those planning to sell their residence in the near future and want to avoid paying high interest rates.
Freddie Mac and Fannie Mae – These government-backed agencies purchase mortgages that meet their criteria. They then package the loans and sell them on to investors through the secondary market.
Nonconforming Mortgages – Nonconforming mortgages don’t follow the guidelines set by Fannie Mae or Freddie Mac and exceed federal loan limits. These loans are intended to make homeownership more accessible, including first-time buyers, those purchasing land or veterans with limited funds.
Bridge Loans – Bridge loans are short-term mortgages that enable you to buy a new home before selling your current one, providing relief for those who must move quickly before selling their current residence and have an urgent timeline when selling.
Reverse Mortgages – Available only to those aged 62 or older, reverse mortgages provide access to your home’s equity through a loan that can be taken out as either an annual lump sum, with monthly payments, as a line of credit or through a reverse mortgage.
When looking to purchase a home, be sure to consult with an experienced lender who can assist in finding the best mortgage for your requirements. Whether you are a first-time homebuyer, repeat buyer or veteran, finding the ideal mortgage can help purchase the house of your dreams and help reach all your financial objectives.