Loan Type Information
There are several types of mortgage loans available to homebuyers, each with its own features and advantages. Here are some common types of mortgage loans:
1. Fixed-Rate Mortgage (FRM):
- In a fixed-rate mortgage, the interest rate remains constant throughout the entire term of the loan.
- Monthly payments are predictable, making budgeting easier for homeowners.
- Common terms include 15, 20, or 30 years.
2. Adjustable-Rate Mortgage (ARM):
- The interest rate on an ARM can change periodically, usually after an initial fixed period.
- Initial interest rates are often lower than fixed-rate mortgages, but they can increase over time, causing payments to fluctuate.
3. FHA (Federal Housing Administration) Loans:
- These loans are insured by the FHA and are designed to help low-to-moderate-income borrowers.
- FHA loans typically require lower down payments and have more lenient credit score requirements.
4. VA (Veterans Affairs) Loans:
- VA loans are available to eligible military veterans, active-duty service members, and surviving spouses.
- They often offer favorable terms, including zero or low down payment requirements.
5. USDA (United States Department of Agriculture) Loans:
- USDA loans are designed to help rural and suburban homebuyers.
- They offer low-interest rates and zero down payment options for eligible borrowers.
6. Conventional Loans:
- Conventional loans are not insured or guaranteed by the government.
- They typically require higher credit scores and larger down payments than government-backed loans.
7. Jumbo Loans:
- Jumbo loans are used for higher-priced homes that exceed the conforming loan limits set by Fannie Mae and Freddie Mac.
- They often require larger down payments and have stricter eligibility criteria.
8. Reverse Mortgages:
- Reverse mortgages are typically used by seniors to convert a portion of their home equity into cash.
- The loan is repaid when the borrower sells the home, moves out, or passes away.
It's important for potential homebuyers to thoroughly research and understand the terms and conditions of different mortgage options before selecting the one that best fits their financial situation and goals. Additionally, loan availability and terms may vary based on the lender/creditor and local market conditions.
Call 630-202-5310 or email us today and one of our Licensed, Professional Mortgage Loan Originators will answer all your questions so you can make the best financing decision.