Consider thinking well into the future prior to starting your loan search. You will need to consider whether or not your financial situation will change a little or a lot. Consider also if you are comfortable with a mortgage payment that will change, or prefer one that is always set. Fixed rate loans are a popular choice for those who are frightened by fluctuations. However, these loans often come with a higher mortgage rate. Adjustable rate loans offer a lower monthly payment initially, but this could change if the rate is increased.

 

Here are some of the more common home loan types:

These loans are only offered by lenders who are sponsored by the government. Traditional loans can be used to purchase single family homes, as well as four-plex homes. These dwellings will have a 1st or 2nd mortgage only. They may also be used for refinancing. Limits can change, based on nationwide new property averages. To determine a true limit amount, check the most current rules.

The purpose of these loans is to help individuals in lower income brackets become homeowners. Mortgage companies that offer these loans are backed by a guarantee that the government will step in should non-payment occur. Smaller down payments and lower closing costs are two of the highlights of FHA loans. Another highlight would be a limitation on the amount of fees that can be charged by the mortgage company.

These loans are available to many active and retired military personnel. Eligibility dates start with those who served in World War II and extend to present day. At least ninety days active service must have been served in order to qualify. In the case of those who served during times of peace, a period of 180 days of service should have been completed. Other requirements may also need to be met.

 

Down payment may not be required in the case of VA loans. Other benefits may include the elimination of mortgage insurance, limited closing costs, and extremely reasonable interest rates. Rates are negotiable, as are payment plans.

These loans are reserved for those who have a poor credit score and do not qualify for either VA loans or FHA loans. Since there is a substantial amount of risk involved, these loans often require a larger down payment, and may come with a higher than average interest rate. Subprime loans are not intended to be long term loans. Instead, they are issued for a period of only a few years during which the buyer may work to improve their credit score. Once this has been achieved, more attractive financing options will need to be sought.

 

Your finances, history, employment, and preferences may all need to be considered prior to applying for a mortgage loan. One or more of these types may be available to you. It will be your job to decide which option will be most affordable and beneficial to you personally.