Which Home Loan Is Right For You?
Buying a new home can be exciting, although it can require lots of planning. You will need to decide how many bedrooms, and bathrooms you want, how much total space you will need, and of course the location, as just a start. You can get many ideas by browsing craigslist, or by talking to a realtor.
You will also need to check your credit score to go over your debts and correct any mistakes, and to figure out how much you will be able to afford. Lenders usually look for a debt load of no more than 43% of your gross monthly income.
Many conventional mortgages also require a down payment, however, there are other loans that may be able to help and even self employed loans
Read on to find out which home loan is right for you. When you’re ready to move, be sure to also check out this moving checklist and free moving labels to make your move a little easier!
1.Fixed Rate Loan
The Fixed Rate Loan is the most common type of home loan. A fixed loan features a fixed interest rate for a fixed number of years, usually 15 or 30. This type of loan is great for those who plan to live in their home for at least most of the loan.
2. Adjustable Rate Mortgage
Adjustable Rate Loans normally offer lower interest rates than a fixed rate loan. However after a set number of years, (usually 5 or 10) your interest rate and payments will adjust. Your payments could be higher or lower depending on the interest rate that year. This loan is good for those who have less than perfect credit scores or those who plan to move or sell their home before the fixed rate is up.
3. FHA Home Loan
Typical home loans usually require a 20% down payment of the house purchase. However, an FHA loan requires a lower down payment usually around 3.5%. However it does come with a few stipulations such as the purchase price of the home must not be over a certain price, and rates are usually fixed for a 15 or 30-year term. You are also required to carry mortgage insurance which is around 1% of the cost of the loan
4. VA Loan
If you’ve served in the united states military for 90 days consecutively during wartime, 180 days during peacetime or 6 years in the reserves then a VA Loan has many benefits to offer. With a VA Loan, you will receive a loan with no money down and no mortgage insurance requirements. There are a few stipulations you must follow such as, it must be your primary home, and the home must meet property requirements.
5. USDA Loan
This loan is designed for families that live in rural areas. There is no down payment required and the interest rates are usually lower. However, you will also be required to carry mortgage insurance.
As you can see, there are several home loans to choose from. You can choose from a loan with a fixed rate, an adjustable rate mortgage with a lower interest rate that may change later, or a specialty loan like an FHA, VA, or USDA loan.