Finding a house that you and your family would like to own is one of the most exciting experiences possible. However, it is easy to become overwhelmed when it is time to figure out how you will pay for the new home. The process does not have to be stressful. Once you know how much you can pay each month and what is available to you for a down payment, the following mortgage loan options are available to you.
Conventional loans account for 75% of mortgages. Most of their popularity is because of their consistent nature. Monthly payments are usually the same over the life of the mortgage and loan terms can run from 10 to 40 years. 30-year loans are the most popular but many homeowners who want to build equity a little faster choose 15-year loan terms. Homeowners who choose conventional loan options find it easier to budget because they know exactly how much they will pay every month until their loan obligations are fulfilled.
These types of mortgages are too pricey to be backed by the federal government. The Federal Housing Agency set the maximum loan limits for mortgages acquired by Fannie Mae and Freddie Mac as $484,350 for 2019. It is most common to see homeowners make use of jumbo loan options in more expensive areas of town. Some jumbo loan programs allow for significantly lower down payment amounts to be made to purchase a house.
Adjustable Rate Mortgages
There can be a few variables with adjustable rate mortgages but the main idea remains the same: The rate of interest on your mortgage will change from time to time throughout the life of the loan. The rate changes are reflective of the state of the economy and the cost of borrowing money. A 5/1 loan is one of the most common adjustable rate mortgages. These loans keep the same rate for the first 5 years of the mortgage. Starting with the sixth year of the loan, the loan rate can change on a yearly basis. ARM mortgage loans are can be a little risky because of the uncertainty involved, but if used correctly they can allow you to obtain a more valuable home than you would otherwise be eligible for.
Home buyers can get a little stressed out when examining all the loan options available to them. However, the process is not nearly as stressful as it may seem if you take a little time to learn a few details about the different loan options. The three loan options profiled above are a great place to start for home buyers who seek to gain a better understanding of the mortgage process.
Looking for more financial tips to turn that dream house into a reality? Jas.Advisors.Grp can help!