When you’re ready to buy a home, you may wonder which type of mortgage loan is best for you. There are many different types of mortgage loans available to potential homebuyers today. Each loan has its own pros and cons, as well as eligibility requirements and costs.
Understanding what your options are can help you make an informed decision about which mortgage loan makes the most sense for your personal financial situation. No matter what kind of home financing you need, the following information will help you make a more informed financing decision.
Each loan type comes with its own set of eligibility criteria, as well as specific costs and risks. Therefore, taking a look at the various options will help you make comparisons.
How the Best Mortgage Lenders New York-Based Companies Can Help
The best mortgage lenders New York-based companies can direct you to a loan product that will meet your criteria with respect to expenses, the down payment, and the loan term. To make sure you’re on the same page, you’ll need to get some idea of your loan options first..
1. Fixed Rate Mortgages of 15 and 30 Years
You can secure fixed rate mortgages for terms of 15 or 30 years. Therefore a fixed rate mortgage of 30 years is designed to be paid off in 30 years while a 15-year mortgage is made to be paid in half that time. Because you’re paying off a 15-year fixed mortgage sooner, you won’t have to pay as much interest over the life of the loan.
2. Adjustable Rate Mortgages
You can also take out conventional and jumbo adjustable rate mortgages. These mortgages, called ARMs, come with adjustable rates after a period of time. Therefore, your payments will vary monthly, depending on the current interest rate.
3. A HELOC Based Mortgage at a Fixed Rate
A mortgage with a home equity line of credit (HELOC) is a loan that you can use to finance the purchase of a home or make some home improvements. The interest rate on a home equity line of credit is based on the interest rate of the underlying mortgage and your credit score.
You can use a HELOC to make a large investment, such as financing the purchase of a second home, or for paying for home renovations.
An Adjustable Rate Mortgage with a HELOC
This type of loan has an initial interest rate that is lower than a standard 30-year fixed rate mortgage. Again, you can use the home equity line of credit as a source of additional money for a large investment or to pay for home improvements. Most HELOCs come with this type of financing or varying rates.
Other Available Loan Products
Other types of loans include Veterans Administration (VA) loans, available to veterans, and construction loans, created for borrowers who are building a new home. USDA loans are featured for borrowers who wish to buy a home in a remote area.
Concluding Thoughts About Home Loans
There are many types of mortgage loans out there, and all have different features, benefits, and costs. No matter what type of mortgage loan you decide to get, make sure you have a plan in place to make your payments each month. A solid financial foundation is crucial when it comes to buying a home, so make sure you understand what is involved when you secure a loan for a house.