There are so many important decisions to make when it is time to choose a mortgage, especially when you have already fallen in love with the house of your dreams and want to secure the sale as quickly as possible.
So, to speed up your house-buying process, here is how to choose the best mortgage option for you.
Conventional Types of Mortgages
The most important thing to know about conventional mortgages, as in those that most private homebuyers use to finance their new purchase, is that they are never backed by the federal government.
If you have stable and recorded employment history and your credit rating is good, then as long as you have around three percent of the total value of the house to put as a down payment, it is more than likely that you will be accepted for a conventional loan.
FHA Government Mortgage Loans
The FHA (Federal Housing Administration) offer government-insured loans for moderate to low-income property buyers, which are a fantastic option for people with a lower credit rating.
When looking at and comparing the different pros and cons of a 15 vs 30 year loan, researching FHA loans will give you a clearer idea of what you can expect and how much your repayment plan will amount to.
Fixed Rate Mortgages
For those people who are more comfortable paying a little extra in each monthly repayment amount than the average, a fixed-rate mortgage may well be the best choice.
Essentially, fixed-rate mortgages are usually between ten and thirty years and come with a set interest rate, with less time it takes for you to pay off the loan making the repayments appropriately higher.
Shorter mortgages on a fixed rate basis are an excellent option, provided you are sure that you can easily make the mortgage monthly repayments, as these types of loans when taken out in error, can result in the accumulation of debt and interest.
Conforming Mortgage Loans
The federal government set maximum loan limits to create the next option of mortgage choice, that of a conforming mortgage loan.
Conforming mortgage loans vary depending on the state in which you reside and as of 2022, the Federal Housing Finance Agency decided upon the baseline for the loan limit of a conforming mortgage loan to be at just over $647,000.
Key advantages of choosing to take out a conforming mortgage include:
- Much lower rates of interest
- Adherence to the consumer protection guidelines
- Mortgage insurance removal
- The ability to choose the right mortgage lender, which suits your circumstance
VA Mortgage Loans
VA (Veterans Affairs) loans are insured by the government and are only available to qualified members of the military services, as well as their spouses.
There is never a down payment required when taking out a VA loan and what is more, borrowers can take out one hundred percent of the loan amount with far fewer closing costs than conventional loans, which is a major bonus.