9 Types of Home Mortgages: Which is the Right one for you?

Do you know that the 30-year fixed-rate mortgage is opted by a majority of people? but that doesn’t make it the best mortgage option for you. Today, there are a dozen of Home mortgage schemes which can prove to be more advantageous as per your financial condition. You just have to do some homework, know the lingo, review your credit score and you will have a better idea of what to choose.

Conventional / Fixed Rate

They are not insured by the Federal government but are a safe bet because the monthly payment won’t change over the life of the loan. You can get them in 10, 15, 20, 30, and 40-year terms, but the 15 and 30 are popular. There are two types in it: Conforming loans, which fall in the limits set by Freddie Mac or Fannie Mae; Non-conforming loans which do not fall in these limits.

Who should get it?

Borrowers with strong credit, employment history, a stable income and a down payment of at least 3 percent should go for them.

Adjustable Rate Mortgages

In this loan type, the interest rate changes based on a specific schedule after a fixed period at the beginning of the loan. They are risky because if interest rates go down, you can take advantage without refinancing; but if they shoot up, it can result in sky-high payments. ARMs come in 3 main types:

  • Variable Rate ARM: This is a true ARM in which the interest rates will be adjusted throughout the loan term.

  • Hybrid ARM: They come with a fixed interest for an initial fixed period and then the rates adjust according to the market rates and conditions of that time. They come in the following types – 10/1, 5/1, 5/5, 5/25, 3/1, 3/3 and the 2-step ARM.

  • Option ARM: In this, you get 4 monthly payment options to begin with – Interest-only payment, a set minimum payment, a 15-year, and a 30-year amortizing payment.

Who should go for it?

Those whoa re ready to take risks, with a low credit score, and those who don’t plan to stay in the home beyond a few years.

Government Backed Mortgages

The US government is playing its role in helping more people become homeowners. Hence, government backed entities are offering loans, which if the borrower defaults, the government will cover the lender’s losses. They are of three types:

  • FHA Loans: They are backed by the Federal Housing Administration and are popular. Borrowers need a minimum score of 580 of FICO to get the 3.5 % financing, but a credit score of even 500 and a 10% down will also do. They are good for first-time home buyers and those with low credit.

  • VA Loans: The Department of Veterans Affairs back these loans with zero down. They are mostly for the active duty national, reserve guards, and veteran members of all the branches of the US armed forces.

  • USDA Loans: The United States Department of Agriculture promotes rural homeownership and hence offers discounted interest rates with no down payment required. Families with moderate to low income qualify for these loans.

Jumbo Mortgage

These are conventional loans with a non-conforming limit, these loans are too big for the Federal Government to purchase or guarantee. Interest rates are competitive and you can borrow more money to buy a home in an expensive area.

You can get up to $3 million finance and also any of Fixed rate or Adjustable rate Mortgages, but a minimum credit score of 680 is required. These loans are for the high-income affluent buyers looking for an expensive home to purchase.

Reverse Mortgage

This mortgage is available for elderly citizens who are above 62 years of age. There are no mortgage payments and no credit qualifying here. Homeowners get access to their home’s equity in a loan which they can withdraw in a lump sum, with a revolving line of credit or set monthly payments.

Where to get these Home Mortgages?

It is equally essential to select the financial institution where you will apply for home loans. More than half of the Loan market is constituted by the lending firms which are not banks! Hamilton Group Funding has been one of the best national mortgage lending firm known for its outstanding customer service.

The loan applying process is very simple, easy and customer friendly which also includes a free consultation. Along with the above-mentioned loans, Hamilton Group also offers HomeReady® and Home Possible® for low-to-moderate-income borrowers. You can visit their website to know more about their loan programs on hgfloans.com.

Hamilton Group has an experienced team of mortgage experts who will be with you, every step of the way and control the whole mortgage process from application through closing. With Hamilton Group, your dream of owning a home in the US will come true and you will be glad to join thousands of borrowers who have benefitted from their loan programs.

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