If you’re getting ready to purchase a home, it’s imperative to be prepared. Research from the National Association of Realtors found that 34% of people getting ready to purchase a home are doing this for the first time. Whether you’re a new or experienced home buyer, it’s wise to understand how various types of mortgages differ from one another. With that in mind, here are the differences between popular types of mortgage loans.
- VA Loans
If you’re a veteran or currently serving in the military, you’ll probably be able to qualify for a VA loan. This type of loan was created for those serving our country. Due to the nature of their work, it’s often difficult for the military to obtain credit the same way civilians do. Therefore, VA loans have more relaxed credit requirements and don’t require a down payment from the borrower. However, those who qualify for a VA loan will still need to pay certain fees before closing on their home. Those wanting to find out more about VA mortgage rates and closing costs should contact mortgage lenders.
- FHA Loans
There are loans that the Federal Housing Administration backs. In order to qualify for an FHA loan, you’ll need to have a minimum credit score of 580. However, a credit score of 500 is acceptable as long as you’re able to provide a down payment of at least 10%.
- Fixed and Adjustable Rate Mortgage Loans
Before visiting mortgage companies, it’s wise to learn about fixed and adjustable rate mortgages. Fixed rate mortgages have varying loan terms. However, the most common terms for these loans are either 15 or 30 years. These types of loans are popular choices for homeowners wanting a monthly payment that doesn’t change over time. If you’re wanting to pay less interest, you might consider an adjustable rate mortgage. Unlike fixed rate loans, interest rates for adjustable mortgages are based on current market conditions.
In closing, it’s important to understand the differences between popular types of mortgage loans. It’s understandable to feel confused about which type of mortgage loan is right for you. In fact, research obtained from 2016 found that 59% of homeowners wished they had a better understanding of their mortgage’s terms and details. If you’re wanting assistance while making this important decision, consider contacting a mortgage company. You don’t need to know all about mortgage rates in order to work with these types of companies. These companies study current mortgage rates, helping buyers purchase the home of their dreams.