There are so many mortgage loan choices out there that one gets confused about which one is right for them. The US housing market is very strong and the prices of the house are rising constantly. The rate of the conventional loans is around 4% and the FHA and VA loan rates are even lower, which is one of the main reasons why mortgage lenders are approving so many applications. If you are looking forward to purchasing a house, it is important that you understand the entire process, so that there are no surprises later on. Let’s have a look at all the important details.
For people who want to purchase homes or want to refinance it, there are several types of loan options available. The first thing that you need to know is the size of the loan, which is the amount of money that you will be borrowing. After this, you should know the amount that you will be spending and the amount that you will be putting down as the down payment. You can even use the help of a mortgage calculator in order to find out the basic math behind the loan.
The most common loan is the conventional loan with 30 year fixed interest rate, as more than 65% of the people opt for it. Conventional loan is backed up by Freddie Mac or Fannie Mae and can’t be used for homes that have more than 4 units.
The FHA loans are preferred by people because they have low down payment requirements and the approval standards are also very lenient. For most of the FHA loans, you only have to put down 3.5% down payment.
These are only for military borrowers and have no down payment requirements.
Some people prefer the adjustable mortgage rates because it has low introductory rates and others prefer fixed rates because the interest remains the same for the entire length of the loan. Analyze your financial situation before making a choice.
If you are still unsure about the type of loan that is suitable for you, you should know your credit score as that will help you out for sure. If your score is not up to the mark, you should improve it because high scores can help you in getting additional mortgage options.
Here are some of the tips that will help you out in getting a good mortgage deal: