Understanding Various Home Loan Programs
If you are looking to buy a home, then you will definitely be looking for a mortgage loan as well.
Many types of mortgage loans are available; you have to pay a specific down payment, insurance, and interest for each mortgage loan. Look at all of these mortgage loans and find out which one suits you best for your situation.
These are the most popular mortgage options; conventional loans are not insured or guaranteed by a government agency. Conventional loans are cheaper than government-backed mortgages, but borrowers have to fulfill strict requirements. These are common types of conventional loans:
- Fixed-rate conventional loans: In fixed-rate conventional interest rate remains the same as long as you have the mortgage. Most people go for a 30 years mortgage plan as the borrower will pay an affordable monthly payment. But fixed-rate conventional loans are also available for a shorter period.
- Adjustable conventional loans: In adjustable conventional loans, the interest rate applied on borrowed amounts varies throughout the life of the loan. In a conventional adjustable loan, it is predefined that how much interest will rise every year or over the lifetime of the loan.
- Low down conventional payment loans: A few years back, 20% down payment was required to buy a home through conventional loans. But now, the conventional loan has become more flexible.
- 3 down conventional loan: Also known as conventional 97 loans, if you qualify for three down the conventional lawn, in this case, you will only pay a 3% down payment.
- 5% down payment: You can also get a conventional loan only at a 5% down payment if your credit score is low.
- 0% down payment: There is a chance you can get a 0% down payment loan as there are some in house, conventional non-conforming programs that offer 100% financing, but you must meet their criteria. But you have to pay a higher interest rate.
The borrower has to fulfill strict requirements to get a conventional loan, and sometimes he has to pay a 20% down payment. Federal housing administration offers a mortgage program for low and medium-income borrowers at 3.5% down payment. FHA loan is government-backed.
The persons who have served in the USA military can get a veteran loan that is a great alternative to a conventional loan. The person who qualifies for a VA loan can get home with 0% down payment and at a favorable interest rate.
This is another US government supported home loan; this basically a rural development loan designed for families living the rural areas. Government finances 100%; in other words, 0% down payment and qualified borrowers are offered discounted interest rates. The government introduced this program for financially struggling families so that they can put homeownership within their grasp.
Bank statement mortgage
This mortgage is designed for those persons who are earning nontraditional income like freelancers, contractors, seasonal workers, gig workers who don’t have tax forms that are required for a traditional mortgage. In the bank statement mortgage, a borrower can use his bank statement instead of a tax form to verify his income.
Nowadays bank statement loans are gaining a lot of popularity over stated income loans because banks or lenders prefer less risky borrowers.
Want to discuss potential loan options for you? Give me, the Colorado Mortgage Guy, your Colorado Mortgage Specialist, a call today at 303-818-0699.