Those interested in purchasing a home will find that there are various types of home loans to choose from. It is important that all potential homebuyers pay close attention to the different types of loans in order to ensure they select the best mortgage for their needs. Some of the most popular types of home loans include fixed rate mortgages, adjustable rate mortgages, FHA loans, VA loans, Rural Housing loans, piggyback or hybrid loans, swing loans and reverse mortgages. Each type of loan has its own benefits and drawbacks. It must be realized that no two borrowers are in the exact same situation; therefore choosing a mortgage isn’t a “one size fits all” method. Borrowers must ensure they choose a mortgage based upon their own financial and personal needs. Mortgages should be selected based upon income, monthly budget and purpose.
Your first step in choosing a mortgage type is to assess your personal and financial situation. Are you a veteran? What type of career do you have? How long are you going to stay in your home? Do you have plans to sell the home quickly? Where do you see yourself and your family within five, ten or fifty years? Are you a senior citizen? The answers to these questions and more can go a long way in helping you decide which type of loan is best for your circumstances. You may also find that it is a good idea to speak to a financial counselor as he or she can give you expert advice regarding which loan method is right for you.
There is no doubt that when people consider purchasing a home the first thing they think about is the interest rates on the loan. You’ll need to decide, however, if a fixed rate mortgage or adjustable rate mortgage is best for your needs. Homeowners seek out mortgages with the lowest interest rates as this enables them to purchase more home. Though interest rates are vitally important, you can’t just guarantee that you’ll get the best or lowest rates because you want them. Your personal credit history will play an important role in how much your rates will be. Those with less than perfect credit should expect to pay higher rates on any loan they obtain.
Performing research is key to getting the best deal on a home loan and there are many local resources available to assist you in your journey to homeownership. Check with your local housing department and determine what classes, seminars and workshops are available. Often times, the lender you are considering going with will provide classes regarding home ownership. These can be an invaluable source of information that will help you make the best choice when choosing between different types of home loans.
Seniors may be interested in obtaining reverse mortgages. These are seen as an investment tool and are for those aged 62-years-old and over. These mortgages can be fixed rate or adjustable and are very popular with seniors who need to free up additional streams of revenue. If you are 62-years-old or over, speak to a financial counselor or planner regarding reverse mortgages as this may be a suitable option and enhancement to your financial portfolio.
One very important area that must be addressed, as it will help you decide the best mortgage for your needs, is how long you plan to stay in the home. Those who plan on selling their home quickly have a number of different mortgage options that will enable them to save money by reducing interest rates during the initial portion of the mortgage, as well as have low down payments. As there are many types of home loans available the best solution is to perform your research and speak with a financial expert who can assist you with your decision.