Choosing the right mortgage program is never easy. The only way you can do it is by looking at your own financial situation and then examining each program with a microscope. In this article, we’re going to show you what your choices are and the various characteristics of the different types of mortgages.
Keep reading to find out more about the right mortgage program for you.
The 30-Year Mortgage
This is the most conventional mortgage program available. As you can garner from the name, you pay the money back over 30 years.
The main advantages of this program are:
- It’s ideal for people if you want to know that your payments are never going to change.
- If the interest rate is in your favor, it’s a good time to take this type of mortgage.
- This program is ideal for people who want to stay in a house for the long-term.
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The 15-Year Fixed Mortgage
There are no real variations with this type of mortgage other than that you have to pay back the money in half the time. It’s not ideal for someone with a lack of disposable cash. You have to be able to meet much higher monthly repayments.
On the other hand, if you can do it you’re in a strong position because you’ll save thousands on the interest.
This unconventional loan is insured by the FHA. The Federal Housing Administration means that you’re considered to be less of a risk by lenders. You’re essentially being insured by the government. If you default on the loan, the government will cover the costs for the lender.
If you can’t get a normal loan, this is perfect. It’s mainly for first-time buyers who want to get on the housing ladder.
The main characteristics of this loan are a lower down payment of around 3.5% and you don’t need a high credit score. You also have no need to take out a private mortgage insurance package.
VA loans are another form of a loan insured by the government. These are available for people who served in the US military. If you qualify for this, you can qualify for 100% in financing. It comes in variations, so you can take a VA loan for 15 years or 30 years.
These are loans for amounts over $417,000, as of this time of writing. You will have to pay a much higher down payment because you’re considered a bigger risk, though. Like other forms of loans, they have variations, so you can take out a 30-year fixed loan and an adjustable rate loan.
Amounts of $650,000 or over are classified as a type of Super Jumbo Mortgage.
You need a stellar credit record to qualify for these loans.
Adjustable Rate Mortgages
Adjustable rate mortgages are dangerous, but they can also be extremely beneficial. At the moment, the interest rates are working in your favor because they’re going down. If the interest rates rise, that’s when you can find yourself paying more.
They begin with a set interest rate to prevent major fluctuations, but after this set period is up to the mortgage rate changes according to nationwide interest rates.
Some lenders will adjust the interest rate per annum, but some can even change the interest rate per month.
If you’re financially intelligent and you don’t intend on staying in your home for a long time, this is an ideal option for you.