If you’ve ever been intrigued about the many types of mortgage loans, you’ve probably been frightened by the numerous alternatives available to you, especially in terms of the best refinance rates. It’s natural to be perplexed after viewing what’s on the market, primarily if you’ve never owned a house before. Thankfully, there is a simple solution.
The average homeowner needs to understand the following mortgage loans when buying or refinancing a home: fixed-rate mortgages, adjustable-rate mortgages, Hawaii VA loans, and jumbo loans.
To help you better understand these options, we’ll go through the four most popular types of mortgage loans so you can find the one that’s right for you!
- Fixed-Rate Mortgages
With the operative term being “fixed,” you can be assured that the monthly amount will not change during the life of the loan, providing you with security. If your homeowners’ insurance or property taxes are included in your monthly mortgage payments, your monthly payments will only change if they are adjusted.
This is the ideal option for individuals who intend to stay in their house for a long time and demand consistency in their monthly payments.
- Adjustable-Rate Mortgages
Adjustable rates provide you the best interest rates possible, which vary annually based on market conditions. These can help you save money in the beginning and save a lot of money in interest.
Consider the length of your stay in the property since these loans are best suited for people who are comfortable with risk and do not want to stay in their house for more than ten years.
- VA Loans
VA Loans are available to both active-duty and retired veterans who want to buy or refinance a house. They have low-interest rates for housing loans and don’t need a down payment or monthly mortgage insurance.
A portion of these loans is guaranteed by the US Department of Veterans Affairs, allowing the lender to provide a more favorable set of conditions.
- Jumbo Loans
Jumbo loans, also known as non-conforming mortgages, are a feasible option for people who want a loan amount higher than the FHFA’s existing conforming loan limitations.
Jumbo loans are approved in the same way as other types of mortgages—with your existing credit score, down payment amount, cash reserves, and monthly debt commitments all taken into account.
Conclusion
Apart from these four, there are also a variety of additional lending options to explore, such as government-backed loans (FHA and USDA), loans for the self-employed, and construction and remodeling loans. These options are some that you may also want to consider before purchasing or refinancing your property.
Now that you’ve learned the basics of the four commonly used mortgage loans, it’s time to assess your lifestyle, and how best you can achieve your dream home. To get started on the right foot, however, make sure to get in touch with a wealth manager or a mortgage broker who can help you fulfill requirements and decide on the right loan for you.
Do you want to learn how to get a mortgage? Get in touch with Skyway Financial! We are a full-service mortgage company that helps homebuyers and homeowners in California, Florida, Michigan, Texas, Tennessee, and Virginia. As your one-stop-shop for finding the right mortgage fast, we’ll help you secure the best possible rate and loan terms. Let’s work together—contact us today!
