Congratulations! You’re finally getting a new home. Just like everything else you have to consider when buying a new home, you must become familiar with all types of loans before you can start your new life. There are 6 types of loans, all with their own pros and cons. We want to help you understand them better, so we’ve prepared a brief list to introduce you to each one!
This is one of the most common and convenient loans for future homeowners. As the name suggests, this type of loan sticks to the same interest rate until it is fully paid off.
Adjustable-Rate Mortgages (ARM) are the opposite of fixed-rate loans. They can be desirable to some buyers because they offer a low-interest rate during the early years of your loan. After some time has passed, they begin adjusting the interest rate at least once a year by raising or lowering it.
This is a pretty straightforward loan. You will be borrowing from a Federal Housing Administration, whose loans are sponsored by the government. With this option, the down payment can be lowered from 20% of the total price down to 3.5%. This makes it a reliable option for any buyers who have not saved up for a down payment but are in urgent need of a home.
Veterans Affair Loan
For veterans or individuals who have served in the United States Military, a VA loan is ideal and most convenient. No further requirements are needed to qualify for a mortgage and no down payment will be asked from you. You will get to enjoy your home right away. In order to qualify for this loan, you must have served 90 days straight in wartime and 180 in peacetime. If you can’t meet these requirements, having spent 6 years in the reserves is applicable as well.
The USDA Rural Development loan is specially directed towards families in rural areas. If your family lives in a rural area and you have your eyes set on a certain USDA-approved home, then this is for you. This loan will not require any down payment and even offers discounts for mortgage interest rates.
If you have a high credit score and low DTI ratio, then this is one of your best options. If you are a homeowner that is looking to purchase a new house before you are finished selling or paying off your previous home, then this loan will combine your past and current mortgages into one until your previous home has been sold.
The Right Loan for You
Have you figured out which loan is right for you? Before purchasing and moving into your new home, you need to decide on which loan meets your needs. If you feel unsure, then there’s no need to worry. We are ready to help you out!
As a group of Pennsylvania real estate agents, we are committed to helping our clients find the home of their dreams. For any inquiries or questions, please do not hesitate to contact us!