When diving into mortgages, your rate’s structure plays a pivotal role. This rate determines your yearly interest on the mortgage. Minor differences can lead to significant costs over the loan’s lifespan.
Typically, rates are categorized as “fixed” or “adjustable.” While most loan types provide these options, it’s essential to recognize the distinctions.
These offer a consistent interest rate throughout your loan’s term. Commonly available in 30-year and 15-year terms, they provide a stability few others can match.
Best for those who… Desire a consistent, lower monthly payment for the entire loan duration.
Adjustable-rate Mortgages or ARMs, starting with a lower upfront rate than fixed-rate ones, ARMs adjust periodically to mirror market conditions post the initial fixed phase.
Best for those who… Plan on holding the property for only the fixed duration or anticipate future rate reductions.
Best for those who… Struggle with credit scores or can’t manage a 20% down payment.
Best for those who… Reside in eligible rural zones and seek no down payment loans.
Best for those who… Are military members eyeing lower rates or no down payment mortgages.
Best for those who…
have better credit and want to purchase a more expensive home than is allowed by FHA limits.
Best for those who… Have impressive credit and an income surpassing HomeReady restrictions.
You don’t always need a significant down payment. With entities like FHA, USDA, or VA, or even specific conventional loans, many buyers can benefit. Our team, along with our network of partners, can service these types of loans for anyone who is eligible.
A notable advantage is avoiding Private Mortgage Insurance (PMI) by making a 20% down payment. While options exist for lower down payments, reaching this 20% threshold can yield significant long-term savings. For borrowers with a minimum of 10%, the piggyback option is available as an strategy to avoid PMI.
The intricate relationship between credit scores and interest rates in conventional loans cannot be overstated. Higher scores often mean lower interest rates, as lenders associate these scores with decreased risk.
The hallmark of conventional loans is their down payment flexibility. Options can start as low as 3%, accommodating diverse financial situations for various borrowers across the board.🙂
Conventional loans have loan limits that can vary based on the country and property type—whether it’s a single-family residence (SFR), 2-unit, or even 4-unit properties.
Considering premium homes or investment properties? Jumbo or investment property loans might fit your needs. Mortgage values above $726,200 (in most counties) are considered “non-conforming,” needing a Jumbo Loan.
Jumbo Loans are for purchasing a property for for which loan amount is exceeding loan limits sets by the Federal Housing Financing Agency (FHFA).
Investment Loans are for purchasing a property for the purposes of generating income, rather than a primary residence home purchase.