F inding the right loan for you is just as important as identifying and comparing interest rates and loan fees. The right program will help you maximize your purchasing power, the amount of money you can take out, consolidate debt or help you reduce your loan payment.
The most traditional mortgage type, the conventional product typically has more restrictive guidelines but tend to more greatly benefit those with good credit. The 30 year fixed has the flexibility to pay the loan off with a lower payment due to the longer term.
A traditional mortgage product with a reduced term that typically garners a lower interest rate due to the term reduction, the 15 year fixed loan product has the benefit of one of the lowest rate offerings and a fixed rate over the duration of the term of the loan.
Loans designed for either active duty or veterans of our nation’s military. The VA program typically offers flexible guidelines, discounted rates and programs that allow qualification up to 100% of the value of the property. VA loans do have a requisite funding fee for all uses of VA benefits where the veteran does not receive disability.
ADJUSTABLE RATE MORTGAGE LOAN
ARMs are loans where the interest rate is fixed for a specified period of time and then adjusts yearly thereafter based on market conditions at that time. Yearly and lifetime caps are put in place to protect the customer against heavy adjustments should the market move dramatically in given intervals. These types of loans carry fixed periods of 5/7/10 terms are typically suited for the customer with shorter term goals for either the home or the loan itself.
The Federal Housing Administration offers a loan product with typically flexible requirements, fitting the needs for low down payment or potentially distressed credit qualification. The FHA program does have an up front funding fee and a mandatory monthly insurance that never retires while the loan is active.
FIRST TIME HOMEBUYER LOAN
There are several programs that allow first time homebuyers to put down minimal funds for closing while still getting discounts to the interest rate and/or private mortgage insurance. Fannie Mae’s Home Ready or Freddie Mac’s Home Possible both offer discounts to the customer to help them more easily obtain the home..