Whether you are a first-time homebuyer or current homeowner, finding the right home loan can be tricky business.
Fees, down payments and interest rates must all be considered before committing to the right mortgage lender.
Fortunately, there are programs and financial institutions available that can meet your specific needs.
For instance, government-insured loans have stringent requirements but provide cheaper loan options if you qualify.
Regular loans will require a higher credit score but are also viable home loan options. If you want to find out which home loan will suit your needs, continue reading the sections below.
Learn About FHA Loans
This government home loan is designed for low- to moderate-income borrowers. This loan type is ideal if you are a borrower that wants to put a lower down payment and has a poor credit score.
This loan is also not like a typical mortgage loan. If you qualify, you will receive a loan from a lender that is FHA approved and then the FHA will guarantee the loan.
As of 2019, it is possible to borrow up to 96.5 percent of the value of a home with this loan. This will require a down payment of 3.5 percent.
You can make your down payment from your savings or a grant for down payment assistance. Individuals or households typically have a credit score of at least 580 to qualify.
Learn About VA Loans
With a VA home loan, the VA provides you with some options so you can serve your specific needs. For example, the purchase loan allows you to buy a home with a competitive interest rate without requiring a down payment or mortgage insurance.
Like the FHA loans, these loans are provided by VA-approved lender and then the VA will guarantee a portion of the loan. When the VA guarantees the loan, you get additional advantages such as limits to closing costs you are charged and no penalty fee if you pay off the loan early.
Learn About Fixed-Rate Mortgage Loans
Unlike the previously mentioned loan types, this one is not insured by the federal government. This type of loan will keep the same interest rate during the loan term.
This means that your monthly loan payments will remain the same. A fixed-rate mortgage usually comes in terms of 15, 20 or 30 years.
Because this loan type is generally not backed by the government, you must take a closer look that the fees, down payment and interest rates.
Financial institutions providing these loans will be looking to individuals with decent credit scores. This type of loan is beneficial to those who want to make a precise budget.
Learn About Adjustable Rate Mortgage Loans
Also known as ARM loans, this loan type is also uninsured by the government and applies fluctuating interest rates.
This means the interest rates shift with the market conditions. Certain ARM loans have a fixed interest rate for some years before the loan resets into a variable interest rate for the rest of the term.
It is important to find an ARM that has a cap.
One benefit of the ARM loan is the loan will have a lower fixed rate in the first few years of owning your home. You are also able to save a substantial amount of money on interest payments.
However, it is important to note that monthly payments can become difficult to pay because of the fluctuating rates.
Learn About Navy Federal Home Loans
This mortgage loan is provided by the Navy Federal Credit Union, one of the oldest credit unions in the nation.
The credit union supports individuals who have an affiliation with the armed forces, Department of Defense, Coast Guard or National Guard.
The Navy Federal also provides unique features such as a zero-down loan option.
The credit union offers a variety of loans, including the previously mentioned loan types.
Although they do not offer fixed-rate loan programs like a 10-year or 20-year fixed-rate loan, a homeowner can amortize their loans.
This means the borrower can pay off the relevant interest expense while the remainder reduces the principal.