Types of Mortgages: An Overview

Choosing the correct mortgage for your needs is nearly as important as paying it off—in fact, they’re often intertwined. However, there are several types of mortgages, and the terminology can feel overwhelming when you’re just beginning this process. So, to help you out, we have defined a few of the most common types of home mortgages out there. Once you understand your options, choosing a course of action will be significantly easier.

 

Fixed-rate—This type of mortgage has the same interest rate for the entire repayment term. Therefore, the size of your monthly payment will stay the same. This is one of the most stable mortgage loan options available, but the interest charges are often high.

 

Adjustable-rate—An adjustable-rate mortgage has a changing interest rate. Though they often begin with a fixed rate for several years, the ARM will change every year following this period. These often start off with a lower rate than a fixed-rate mortgage but rise over time.

 

Conventional loan—This type of loan is not insured or guaranteed by the federal government in any way.

 

Government-insured loan—There are three types of government-insured loans: FHA, VA, and USDA/RHS.

  • FHA is a mortgage insurance program managed by the Department of Housing and Urban Development. These are available to all types of borrowers, and the program allows borrowers to make very low down payments. However, monthly payments will be high because of mortgage insurance.

 

  • VA is offered by the U.S. Department of Veterans Affairs. It is a loan program for military service members and their families. The loans are guaranteed and insured by the federal government. Borrowers can receive up to 100% financing for the purchase of a home, meaning no down payment whatsoever.

 

  • USDA/RHS loans are provided by the United States Department of Agriculture and are managed by the Rural Housing Service. This type of mortgage loan is offered to rural residents with a stead, low-to-modest income.

Getting Mortgage Advice is Easy

Purchasing a home is increasingly seen as a cultural indicator of success and adulthood. Owning a home is a dream for Americans nation-wide, but that goal can only be achieved with the right players, the appropriate resources, and salient, informative advice. Most often, individuals and couples need to borrow money in order to purchase their homes; mortgages, then, make up much of the United States economy. However, there are hundreds of different types of mortgages—how do you know which is best for you and your financial needs?

 

A mortgage is a very long commitment—the length will vary by lender and type, but most standard, fixed-rate loans have a 30-year payment period. As a result, choosing a mortgage is a very important decision; getting the wrong option can be devastating, and you could suffer potential consequences for years to come. Starting the borrowing practice with the right set of tools is necessary to both pay your mortgage at a fair rate and avoid potential foreclosure. That’s where we come in.

 

The Internet is a great resource for finding the perfect mortgage fit. However, blogs and informative sites can only go so far; even with all the information, you will still want the satisfaction of having a professional’s approval. That’s exactly what we do. We specialize in helping you avoid typical mortgage pitfalls by pairing you with a perfect loan. We take into account fees, interest rates, and loan conditions when matching you with a lender and loan type. With us, you are guaranteed to find the best mortgage for you, your financial status, and your future home.