Understanding your mortgage options is key to getting the right type of financing for your home. Whether you’re a first-time homebuyer, seasoned pro or current homeowner looking to refinance, there are several options to consider when it comes to mortgage products.
Know Your Options
It’s always important to consult with a qualified expert when deciding on the best mortgage option for your current situation and needs. The following information provides a basic overview of key elements surrounding each home loan type.
- Repayment terms typically 15, 20 or 30 years in length
- Interest rate may be fixed or adjustable
- Good credit score (620 or higher) usually required (credit score requirements vary among lenders)
- Usually require down payment of 5% of purchase price or higher
- Down payment amounts less than 20% of purchase price require Private Mortgage Insurance (PMI)
- Not insured by the Federal Government
- Follow mortgage guidelines established by Freddie Mac and Fannie Mae
- Designed to help those eligible obtain competitive interest rates
- Guaranteed by the United States Department Veterans Affairs
- Good credit score (620 or higher) usually required (some lenders may allow credit scores as low as 580)
- Repayment terms typically 15 or 30 years in length
- Interest rates may be fixed or adjustable
- No down payment or PMI required
- Only service members, surviving spouses of service members and veterans may apply (must have VA eligibility to qualify)
Adjustable Rate Mortgages (ARMs)
- Introductory repayment period features lower interest rate
- Interest rate and payments following initial repayment period typically adjusts on a yearly basis (rates are influenced by major indexes)
- Repayment terms often 15 or 30 years in length
- Terms of loan are typically 3/1, 5/1, 7/1 or 10/1
- Backed by the United States Federal Housing Administration
- PMI required for the life of the loan
- Credit score of 580 or higher often required (500-579 may be accepted if higher down payment applied – credit score requirements are lender-specific)
Please note that fees, terms, credit requirements and closing costs vary among loan types and as influenced by other factors. Contact a mortgage professional for exact details on each type of loan.
Have questions about the closing process and your specific loan type? Contact Linear Title & Escrow today!