Mortgage loans are undoubtedly one of the most popular types of loans there is today. It’s popular because it caters to what a lot of people needs, a home. It is not easy to purchase a house without a mortgage loan since it is costly. According to statistics, before the introduction of mortgage loans in the 1930s, only about ten percent of American families own their homes. Thus, the introduction of mortgage loans revolutionized the lifestyle of many people.
Today, there are many different types of mortgage loans. If you are a new borrower, you might get overwhelmed since they have various offers, terms, interest types, and rates as well. It is not easy to decide which one to take on. You should never make a decision based on what other borrowers took because what might be the best for them may not necessarily be the best of you.
However, you might take into consideration the best types of mortgages based on their advantages. We have the conventional loan, Houston reverse mortgage, VA loan, FHA loan, ARM loan, and the USDA Rural Housing loan.
The conventional mortgage loan is generally the most popular type of investment because of its perks. It is the easiest loan to get approval. All you need is a good credit history, an acceptable credit score, and of course your down payment. When it comes to the down payment, the general requirement is around ten percent of the total cost of the house. It is lower than the standard twenty percent for most lenders.
Additionally, they also offer some of the lowest interest rates and the most flexible repayment terms. To help you in the future, in case you have financial difficulties, you can opt to pay for interest only for a specified period. However, you need to remember, to use this option only when necessary because it will extend the life of your loan.
The U.S. Department of Veterans Affairs offers the VA loan to veterans and their families. If you qualify here then you can get a house early if you have the complete requirements since most of the time they offer no down payment or if there is a down payment, it is at the minimum, only three percent of the total cost of the house.
The FHA loan is also popular, especially among first-time home loan borrowers. But, do note that it is also offered to others as long as they comply with the requirements. When it comes to FHA loans, the usual down payment required is 3.5 percent, and the credit score is usually at 580 only. However, it is not easy to qualify for this loan.
Also read: FHA vs. Conventional Loans in Plain English
USDA Rural Housing Loan
The USDA Rural Housing loan is famous due to their policy of no down payment for most borrowers. However, this loan is right for you if you want to live in the rural areas of the country. This loan is only offered for properties in the rural area and chosen suburban towns.