What Financing Option is Best for Me?
First of all, have you considered what kind of payment your budget allows? Give this due thought as it’s a primary factor in selecting both the right home and the right loan. Once you have a realistic goal in mind, it’s time to discuss lending options with your agent. The sheer number of mortgage options can seem intimidating, but the pros at The Blake Team help clients find the right mortgage every day and will earn your trust through candid and honest advice. Let us know when you are ready to take a look at your specific situation.
Most people will ultimately take out a mortgage in one of the three most common categories: fixed-rate mortgages, adjustable-rate mortgages, or alternative mortgage options. A fixed-rate mortgage is defined by the fixed interest and total monthly payment amounts. Each will stay the same for the life of the loan. These loans make them most sense when interest rates are low and are likely to increase in the future, or when you plan on owning the home for several years or more.
A Blake Team agent has the experience to help you select a lender that is right for you.
Adjustable-rate mortgages (ARMs), as the name implies, have interest rates that can change over time. Interest rate changes for these loans are tied to a financial index, and typically the rate and the total monthly payment will increase or decrease with the associated index rate. An ARM may make sense if you are planning on a short period of ownership, so that the potential rate increase will not likely impact you, or if you believe interest rates are likely to decrease in the future. Finally, alternative mortgages include the Federal Housing Administration (FHA) program and the Veterans Affairs (VA) loan. FHA loans are insured by the federal government to protect lenders and include an insurance premium paid by the borrower. FHAs may be a good option for home buyers with limited down payments or other income limitations. VA loans are insured by the Department of Veterans Affairs, and borrowers pay an upfront fee towards the insurance guaranty. Current and former members of the U.S. armed forces or current or surviving military spouses may qualify.
Any loan, fixed or adjustable, is also called a conventional home loan if it is not guaranteed or insured by the FHA, VA, or US Department of Agriculture (USDA) in its Direct Housing Program. Conventional loans are further broken down into conforming and non-conforming, depending on if they conform to guidelines published by Fannie Mae and Freddie Mac. Conventional loans targeted at borrowers with low credit scores are also known as sub-prime mortgages.