What Different Types Of Home Loan Are There?
Looking for a home is a big financial decision. However, part of the home search is also knowing how to finance that huge expense and how to make this financial decision less painful for your savings. There are many types of loans and each caters to different people. Here are four of home loans that you can choose from.
1. Fixed-rate Loan
A fixed-rate loan is one of the easiest and most popular loans you will encounter once you start looking for home loans. A fixed-rate loan simply means that you pay the same amount and you have the same interest all throughout the years you will be paying. With that said, you no longer have to worry about interest rates affecting your monthly payments.
This kind of loan is perfect for those who like stability and predictability in terms of payments. Its also a good fit for people who plan to stay in their bought properties for a long period of time.
2. Adjustable-rate Loan
Unlike the fixed-rate loan, the adjustable rate loan has interest rates that can go either up or down. For a fixed time during your loans life, you have fixed interest rates. But once that fixed time frame is over, the remaining years of your loan will have changing interest rates. With that said, this type of loan is ideal for people who have low credit scores because a fixed-rate loan often requires a huge interest rate for those who have bad credit scores.
3. USDA Loan
A USDA loan is a type of home loan which doesnt follow the traditional loan structure. This is offered to home buyers in the suburban and rural areas and it doesnt always require a downpayment which is good for those whose savings will not be able to pay for the 20% down payment of other home loans. However, the catch is that you pay a mortgage insurance premium that can reach up to 1% of the total price of the home you are buying.
4. VA Loan
A VA Loan or a Veterans Affairs loan is only offered to the members of the military; although, there are still certain criteria to be met like one should have served for 90 consecutive days during the war. A VA loan has varying terms which also depend on the person who is applying. Some of those terms can be a low downpayment or none at all, or no mortgage insurance premiums.
There are a lot more housing loans that are open for different kinds of people and preferences. If these four do not fit your description, then you can always consult a bank about other housing loans for you.