Guide to the Various Types of Home Loans

If you’re like most first-time homebuyers, you will need a loan to assist you in the purchase of a home. With so many types of home loans available, how do you know which one is right for you? Here is a breakdown of some of these home loans.

FHA Loans

If you just got married and need a home loan, consider a FHA loan. The good news is that to get this loan you’ll only need a credit score of at least 580 to be considered for approval. Other requirements include two years of employment, down payment of 3.5 percent towards the home, an appraisal from a FHA-approved appraiser, and it must have been three years since a foreclosure occurred if this is your situation. With a FHA loan the down payment can be gifted by a family member. To get started, meet with a FHA-approved lender and also save up for a down payment.  You’ll also need to get mortgage insurance and fill out the application.

VA Loans

If you served in or currently in the military, you might qualify for a VA home loan. If  you’re in active duty, you can apply for a VA loan after serving for six months after you first enlist. Servicemembers applying for a VA loan will also need to present a certificate of eligibility and here is the link concerning this, http://www.benefits.va.gov/homeloans/documents/docs/veteran_registration_coe.pdf

One of the best things about a VA loan is that you can get it without a down payment, and mortgage insurance is not required. As for the required credit score, most lenders are looking for something near the 620 or higher range. Borrowers will still need to show proof of steady income and they can’t have too much debt. There is no risk of a penalty for prepayment with a VA loan.

Fixed Rate Loans

These loans come with a fixed rate and this means that you will pay the same mortgage amount each month. You have the option of choosing a 15, 20 or 30 year mortgage. In addition to this, the interest rate stays the same over the course of the loan.

Adjustable Rate Loans

These loans have interest rates that change periodically based on various factors such as economic conditions and as a result the interest rates fluctuate over the course of the loan.

When it comes to choosing a certain kind of home loan, you should research your options carefully. Talk to other loved ones who took out the loan you’re interested in and get their opinions. Also consider the amount you already saved up as well as your income. With these strategies you will find a loan that best suits your needs.

 

 

 

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