Today, settling down has become equivalent to owning a home. Everyone is on the run to own a perfect abode where they can find peace and relax at the end of the day. However, with the current economic fluctuations buying a home has become one of the most complex tasks owing to the mounting real estate prices.
A home loan would be an excellent way to fund your house purchase, given that it’s not advisable to burn all your savings to buy a house.
Many types of home loans designed to appeal to a wide range of borrowers’ needs exist. As a prospective home buyer, you will have to answer some of these questions before proceeding to apply for your mortgage:
- What type of mortgages exist?
- Which ones do you qualify for?
- What are all the costs of the mortgage?
- What are the interest rates on the loan?
That’s just the beginning. From there, the next step involves applying for the loan and finally purchasing the house. This article will discuss the ideal option of home loans prospective buyers can consider before buying their house.
Please keep on reading.
When most people think of a mortgage loan, conventional loans come first into their minds. So what is a conventional loan? It’s a type of home loan that a government agency does not secure. They are the most common home shoppers seek. This is because they’ve no special eligibility requirements as anyone with a 3% down payment and a 620 credit score can qualify for the loan.
The loans are a good option for individuals who don’t qualify for government-insured loans. The maximum limit for a conventional mortgage is $548,250. However, this amount can increase in designated high-cost areas.
VA Home Loan
VA mortgages are considered the best option for purchasing a house for many who qualify as there are no down payments. They are mortgages offered by the US government to help military veterans and active-duty officers become homeowners at an affordable cost. If you have low credit, there are still VA loan home bad credit loan options. To qualify for a VA mortgage, you must meet and prove the following army requirements:
- You’ve served 90 consecutive days in the military during wartime
- You’ve been in the service for more than 181 days during peacetime
- You have been an active member of the National Guard for at least six years
- You are the surviving spouse of military personnel who lost their lives in the line of duty or was permanently injured.
Are you planning to buy a house in a rural or suburban area and have a low down payment? USDA mortgage might be the best option for you. This is a government-financed mortgage in line with its Rural Development Guaranteed Housing Loan program.
They are offered to rural families who are struggling financially. Their advantages are, they offer financing with no down payments, have reduced home loan insurance, and have below mortgage market rates.
Federal Housing Administration (FHA) Loans
This is the best home loan for veterans. The loans allow shoppers with a credit score of just 580 and 3.5% down to become homeowners. This makes them excellent for first-time homeowners. You only need to pay an upfront mortgage insurance premium and a monthly mortgage premium payment.
If you’re planning to buy an expensive house, a jumbo loan is what you need. It’s a loan that covers homes exceeding $548,250. The rates on these loans vary depending on factors like down payments and the loan amount. Their credit score is much higher ranging from 700 and above and a 10% down payment or more.
There are many types of mortgage loans. Before moving on with any loan, carefully consider your financial position. Review your position and circumstances and conduct research to determine which loan will be the best to help you accomplish your goals.