Buying a house is a big financial decision and most people do not wish to buy it outright. They prefer to take out a mortgage or a home loan from a reputed financial institution or bank. Read on to learn more about the different types of mortgage loans.
Types of loans
Many financial institutions offer different types of mortgage loan in Utah and other places. There are many options to suit an experienced buyer and a first-time buyer. There is no reason to get overwhelmed by the loan amount or the decade-long repayment schedules. The wide variety of loans available include conventional mortgages, government insured loans, adjustable rate, and fixed rate mortgages.
Conventional and government insured loans
The government does not support the conventional loans offered by many institutions. There are different types of government-insured loans, such as VA loans, USDA, RHS loans, and FHA loans. The US Department of Veteran Affairs offers VA loans, which requires no down payment from the borrower, while the Federal Housing Administration offers FHA loans.
The USDA and RHS loans are offered by the Department of Agriculture and the Rural Housing Services respectively. These loans are ideal for borrowers with lower income and those who live in rural areas.
Fixed and adjustable rate loans
Fixed rate mortgages carry the same rates throughout the duration or term of the loan. This means you will pay the same amount every month. These loans are normally for a 15 or 30-year period. Adjustable rate mortgages or ARMs are loans where the interest is in tandem with the market rates. Some ARMs are flexible in the beginning and change to fixed rates later, while some others are reverse, meaning the rates are fixed in the beginning and change to flexible rates later.
There is always a mortgage to fit your needs. Consult a mortgage broker or a lender before choosing a particular type of loan.