With numerous mortgage lenders operating in the market with a bevy of mortgage loans offers, it is indeed very difficult for you to select the right mortgage. In order to pick the right type of mortgage, it is very important that you should have clear idea about different types of mortgages operating at the market place. Here we concentrate our discussion on the popular mortgage types. Hope this will help you make the right choice.
Fixed rate mortgage
This is the oldest type of mortgage present in the mortgage industry. Here, the mortgage rate is kept fixed throughout the entire loan term of the mortgage. Fixed rate mortgages are considered as comparatively safe mortgage options as the monthly mortgage payment amount remains fixed over the entire mortgage term. Fixed rate mortgages can be of 15-year, 30-year or sometimes even 40-year duration. In case you want to make fixed monthly mortgage payments, a fixed rate mortgage would be the right option for you.
Adjustable rate mortgage
Another very popular type of mortgage is the adjustable rate mortgage. Unlike the fixed rate mortgage, the mortgage rate on an adjustable rate mortgage varies with the market rate of interest. Initially, the rate on an adjustable rate mortgage is kept at lower levels than the rate on a fixed rate mortgage. But thereafter the mortgage rate varies with the change in the market rate of interest. Again, if you want to take the risks of making extra payments in case of an increase in the mortgage rate, then an adjustable rate mortgage loan would be the right choice for you.
FHA loans
Unlike the conventional fixed rate mortgage and the adjustable rate mortgage, the eligibility criteria of an FHA loan are less stricter. FHA loans are issued by the private lenders and guaranteed by the Federal Housing Administration. One can obtain an FHA loan with comparatively less credit score than the conventional loans. Moreover, the down payment requirement for such loans is 3.5% of the sale price of the house. FHA loans are particularly suitable for the first time home buyers.
VA loans
Veteran loans are aimed at the individuals who have served the armed fores of the country and as well as for the spouses of the decreased veterans. The eligibility criteria to get approved for such loan are quite easy. This loan can be of 15-year or 30-year type.
Jumbo loans
As the name suggests, jumbo loans are indeed very big loans. Since the jumbo loan amount is quite bigger than other loans, the down payment amount that you have to make is also quite high. Jumbo loans can be available in the forms of 15-year fixed rate mortgage, 30-year fixed rate mortgage, adjustable rate mortgage or FHA loans.
Each of these loans has been designed to cater to the requirements of certain section of the market. It is advised that before selecting any particular type, you should carefully analyze all the aspects of the loan so as to find out the best one for you.
