For many buyers, mortgages can seem intimidating, confusing, and even a bit scary. Even if you’ve dealt with a mortgage before, it can be hard to know which mortgage type is the best for your situation. And that’s where I can help! Here’s your handy cheat sheet with several of the most popular loan types.
Fixed-rate mortgage: Fixed-rate mortgages have a fixed interest rate. That means that the interest rate will stay the exact same throughout the life of the loan. So if you have the chance to get a low interest rate (aka right now!), you can lock in that rate for 15 or 30 years. The nice thing about this loan is that your monthly payment will stay the same through the entire term of the loan–barring changes in your property taxes or HOA dues. Since it’s nice to know exactly what you’ll be paying each month, these loans are the most popular.
Adjustable-rate mortgage: These loans usually come in 15- or 30-year terms like fixed rate mortgages. The main difference is that the interest rate isn’t locked in. It will change over time depending on the market. While this can be risky, especially when you’re dealing with currently low interest rates that can go up, this loan can be a good option for people who don’t plan to be in their homes for over 5-7 years.
VA loans: This loan is for the veterans out there! It’s a great loan option guaranteed by the government and comes with a low interest rate and small down payment.
FHA loan: First time homebuyers, make sure you check this one out! If you’re a first-timer or low-income, this federal loan can get you into a home with a small down payment.
USDA loan: This loan also comes with a small or no down payment perk and usually has a low interest rate. The catch here is that the property you want to buy has to be located in a rural or semi-rural area as designated by the USDA.
The right loan for you is out there, but I know it can be confusing to know which one is best. That’s why I always recommend that my buyer clients work with a lender to see which mortgages will be the best choice. If you want to be connected to my favorite, trustworthy lenders, contact me below.