Tuesday, May 4, 2021

Looking to Buy a House? Choose a Home Loan That Is Right for You

Purchasing a home can be a very overwhelming process. One of the more intimidating parts of the process is determining what kind of home loan is right for you. This article will break down some of the types of loans available to you and hopefully help you choose the one that is right for you.

Non-conventional vs. Conventional Loans

The two main types of home loans available are government, also called non-conventional loans, and conventional loans. Whether or not you should choose a non-conventional or conventional loan depends on many factors including eligibility and your personal financial situation.

A home loan broker can help you explore all of your options, find the loans you may be eligible for, and help guide you through the application and approval process. Be sure to find an experienced professional that can help you make the right decisions.

Non-conventional Loans

Government loans are easier to qualify for because they are backed by the government, and should you be unable to pay back the loan, the government will make sure the lender’s loss is covered. 

Common types of non-conventional government loans are Veterans Administration (VA) loans, Federal Housing Authority (FHA) loans, and U.S. Department of Agriculture (USDA) loans. 

Government loans are generally easier to qualify for because they have less strict requirements in terms of credit score and require less of a down payment than conventional loans do.

Conventional Loans

Conventional loans are somewhat harder to qualify for than government loans but are overall less costly. Conventional loans can either have a fixed interest rate that stays the same throughout the life of the mortgage or an adjustable interest rate in which the interest rate can fluctuate over time. 

Most often, people opt for a 30-year fixed-rate loan because the payment is generally most affordable. There are also fewer common types of conventional loans like renovation loans, balloon loans, bridge loans, equity loans, and reverse mortgages

A home loan broker can help you look over your options, determine what you may qualify for, and help you decide what kind of conventional loan is best for your situation. You may end up paying unnecessary costs if you decide to choose a loan without the help of a broker.

To conclude, there are several types of home loans available to home buyers. It is important to be aware of your particular financial situation and goals to determine which kind is right for you. If you need assistance, home loan brokers are a great resource to help analyze your situation and guide you through the process of obtaining the mortgage that is right for you.

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