Buying a home can be one of the most exciting times in a person’s life. You spend all of your time looking at beautiful pictures of perfectly decorated homes, making a wish list, and thinking about locations. But then you see the price listed just below the address, and your heart does a somersault.
That’s because the financial side of buying a home can be a little overwhelming, but don’t let that stop you! Once you learn the lingo, nail down a budget, and secure a down payment, you’ll be more than ready to get started.
Choosing a Mortgage That’s Right for You
Choosing a loan option that’s perfect for you and your family should be simple. It’s all based on your income, lifestyle, location, and credit. Here are five different types of mortgage loans you can get as a homebuyer.
Which one’s right for you? Let’s take a look.
1. Conventional Mortgage
What is a conventional mortgage? A conventional mortgage is a mortgage loan backed by a private lender rather than the government. With these loans, down payments and interest rates are highly competitive. The down payment requirements vary but may sometimes be as low as 3%!
This is an excellent option for homebuyers with solid credit, a stable income, and tons of employment history. They’re often used for a primary home or investment property.
2. Adjustable-Rate Mortgage
What is an adjustable-rate mortgage? Adjustable-rate mortgages (ARMs) are loans with low initial interest rates. That means you get to take advantage of big savings early on. However, unlike fixed-rate mortgages, the interest rates for adjustable-rate mortgages tend to fluctuate over time. With that fluctuation comes risk, so remember to be cautious.
3. Fixed-Rate Mortgage
What is a fixed-rate mortgage? Fixed-rate mortgages, on the other hand, are loans with predictable payment structures, year after year. While you may not get the same initial savings that you would with an adjustable-rate mortgage, you get consistency, which is ideal. It’s much easier to budget around this type of mortgage.
4. Government-Insured Mortgage
What is a government-insured mortgage? FHA loans, USDA loans, and VA loans, oh my! Government-insured mortgages are exactly what they sound like – they’re loans backed by the government! These government-insured options make homeownership more accessible if you have less liquid cash, less-than-stellar credit, or served in the U.S. Armed Forces.
5. Jumbo Mortgage
What is a jumbo mortgage? Jumbo mortgages are large loans that are most common in high-cost areas. Any mortgage over $548,250 is considered a jumbo mortgage, except for Hawaii, Alaska, the U.S. Virgin Islands, and Guam, where the jumbo rate starts at $822,375.
Jumbo loans exist to allow people to borrow more money, so they can afford to live in expensive areas. As a result, they normally have higher interest rates than other loan types.
Get the Mortgage that’s Right for You!
Do your research, build a budget, create your wish list, and get started. Also, remember that you should always bring any unanswered questions to your loan officer or real estate agent. That’s why they’re there – to help! Don’t let financial stress and option paralysis stand in the way of you and your dream home.
If you live in Jacksonville or anywhere in Northeast Florida and would like some guidance or suggestions from awesome loan officers in your area, let us know! We’d love to help.