Which Mortgage is Right for You?

It can be confusing trying to figure out which type of home loan would be best for you.

The best thing to do is learn as much as you can about each option. This will help you make the best choice for the home loan you need. Learn about the different loan programs available to you through Equity Direct Financial, LLC.

 

Mortgage Rate Options

Fixed Rate

Most home loans are fixed-rate loans, for which the interest payments and monthly rate remain the same throughout the life of the loan.

Adjustable ARM

Adjustable-rate mortgages will have a fixed interest rate for an initial period of time, but then they can be adjusted throughout the remainder of the loan. The adjustment is based upon the market conditions at the time. One advantage of an adjustable mortgage is that the initial rate will be lower than a typical fixed-rate mortgage. That initial fixed rate can last anywhere from one month to 10 years. After that, the rate can fluctuate over a period of 30 years.

Interest-Only Mortgages

If your monthly payment does not require a repayment of principal over a certain period of time, it is what is called an interest-only mortgage. What will happen at the end of the interest-only period is that the loan will become fully amortized and result in larger payments each month. With an interest-only term, you might be able to close on the home you want instead of simply settling for a home you can afford.

Guarded-Payment Mortgages

With a guarded-payment mortgage, your loan payment will increase each year for a predetermined amount of time, such as every 5 years or every 10 years, before transitioning into a fixed payment mortgage for the duration of the loan. There’s a smaller initial payment with a guarded-payment mortgage, but the interest rate will increase in the later years of the loan and lead to an increase in the balance owed on the loan.

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Loan Program Options

FHA Home Loan

An FHA Home Loan is fully insured by the Federal Housing Administration, which allows borrowers to secure a low mortgage rate with a low down payment.

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VA Loans

Guaranteed by the Department of Veteran Affairs, VA loans are low-interest loans that are available for military Veterans and their families.

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Bank Statement Loans

Bank statement loans are an avenue for self-employed or contractor workers to secure a loan without having to submit a tax return or some other proof of income they may not have because of their employment situation. Bank statements that show your income can be used instead.

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Jumbo Loans

If you’re trying to buy an expensive home that costs more than what a conventional conforming loan will cover, you’ll need to apply for a jumbo loan to cover the remaining amount.

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