Many forms of mortgage exist. The one that is right for you can depend on your personal circumstance and needs. Understanding what choices are available and what makes – one special is crucial. Here are some of the forms of primary home loans.
Conventional Loans for Home
What comes to mind most frequently when we think about mortgages is traditional home loans. They are loans that either do not need mortgage insurance or are covered by a private entity. Conventional loans may be either non-conforming or compliant. Conforming loans follow the requirements set by the government-sponsored agencies that back most mortgage loans, Fannie Mae or Freddie Mac. A jumbo loan, which, when used when the loan amount is greater than the loan cap set by Freddie Mac and Fannie Mae, is the most common type of non-conforming traditional home loan. Jumbo borrowings allow a borrower to buy a higher-priced house.
There may either be a fixed or adjustable rate for traditional loans. Fixed-rate loans have interest rates that actually remain the same for the entire life of the loan, as the names indicate, whereas adjustable-rate mortgages will allow you to get a low introductory interest rate that will rise over time. In general fixed-rate loans are ideal for homeowners looking to live in their homes for the long term. If you want to retain your loan for a shorter time, an adjustable-rate might be a good choice.
Borrowing from the Government
The United States government is not a mortgage lender but provides such services to help support homeowners in specific situations through different agencies. Only licensed lenders, such as First Home Mortgage, can access these services.
FHA, VA, and USDA loans are some of the most common government loans. FHA loans targeted at borrowers with minimal savings and lower wages are guaranteed by the Federal Housing Administration. VA loans are actually guaranteed by the Department of Veterans Affairs, enabling service members and their families to buy a home with almost little to no down payment. USDA loans are issued by the U.S. Department of Agriculture to low- to moderate-income homebuyers who buy in some designated rural areas.
Loans for Renovation
Loans for renovation are just that, loans to cover the expense of your home renovation. Such loans are available both to current homeowners and to homebuyers who have found a home to buy that needs to be repaired. Garages, driveways, roofs and gutters, room extensions, plumbing and utilities, basement finishes, landscaping and fencing, doors, windows, and decks, patios, and porches are typical repairs and remodel protected by renovation loans.
FHA 203(k) and FNMA HomeStyle loans are two of the most common renovation loans. FHA 203(k) loans covering the purchase of a primary residence and the rehabilitation of one mortgage are provided by the Federal Housing Administration. Two types of FHA 203(k) loans are available: Regular and Streamline. Standard FHA 203(k) loans offer flexibility for borrowers to finance major rehabilitations that cost at least $5,000, while Streamline FHA 203(k) offers up to $35,000 in funding for minor repairs and renovations. An FNMA HomeStyle loan allows either a primary residence, second home, or investment property to be purchased and renewed in a single mortgage up to the lending cap with a minimum down payment of 5%.