Mortgage and interest rates are far from a one-size-fits-all approach. For this reason, it is important for anyone interested in buying a home to consider the many options available to them. Finding the right mortgage is important because this can lead to major financial savings. Take a look at some of the top mortgage options below.

Fixed-Rate Mortgage or Adjustable-Rate Mortgage Types

Depending on the type of loan you qualify for to purchase your home, you may or may not have the option of choosing whether you want the rate to be fixed or adjustable. Some loan types specifically have one or the other, while other loans, like a conventional loan, are available as a fixed-rate or adjustable-rate mortgage.

Fixed-rate mortgage options are most popular. These loans usually come in 15- or 30-year lengths. The biggest benefit of this mortgage is that it provides long-term stability, and it offers the same payment and interest rate to the borrower for the life of the loan. People do not have to worry about their mortgage payment going up in a few years, or what effect rising interest rates will have on their monthly payment. This is a great mortgage for anyone who is planning to stay in the home for longer than five years. This loan is also easy to refinance in the event that the rates rise too quickly, or too far.

Adjustable-rate mortgage loan options, or ARMs, can be a wise choice for some borrowers. The biggest benefit of this loan is that it usually provides a lower interest rate in the beginning and allows borrowers to enjoy falling interest rates without the need to refinance. The rate is fixed over a period of time, from 60 months to 10 years, and then the interest resets annually for the remainder of the term. While there is an upper limit, it is possible that the interest rate on an ARM loan could skyrocket. Therefore, this loan is great for anyone who is planning to move quickly.

Conventional Loan

Conventional mortgages are those that are not backed by the government but are instead insured by a private company. Conventional loans offer a fixed-rate or adjustable rate loan, and typically offer a lower monthly payment than a government-insured loan. Borrowers can also benefit from using this loan for investment properties or second homes as well as more flexibility with the length of the loan, which can be from one year up to 30. Because these loans are not government insured, the risks associated with repayment means that the borrower has to jump through a few more hoops in terms of qualifying for the loan. While these loans close faster than an FHA or VA loan, for example, the credit and income requirements are stricter. However, if you can come up with the down payment, have good credit and an acceptable debt-to-income ratio, you will enjoy lower monthly payments and keep more of your money in the bank than you would with a government-backed loan option.

FHA Loan

For those seeking a loan that caters to people who don’t have great finances, the Federal Housing Administration provides something called an FHA loan. This is ideal for low- or moderate-income households that cannot find loans elsewhere.

The downside is that these loans are insured by the federal government. This means that there is an upfront mortgage insurance fee that needs to be included with the down payment. Typically, the fee is 1.75 percent. It is important to consider this factor, as well as monthly mortgage insurance premiums, when thinking about an FHA loan.

VA Loan

Another option comes from the U.S. Department of Veterans Affairs. Military veterans with a credit score of 620 can apply for this loan, which requires no mortgage insurance premium. The downside is that every loan requires a specialized appraisal that includes a home inspection and a valuation of the property, which can make it harder for some to qualify for these loans. However, with the flexible credit, income and debt requirements, as well as being an available option to those who would not otherwise qualify for a conventional mortgage, this is a very desirable loan option for many veterans and their families.

USDA Loan

Finally, the U.S. Department of Agriculture (USDA) also provides a loan that is geared toward low-income buyers. While a USDA loan was initially established to improve homeownership in rural areas, the loan does cover some areas that may not actually be considered rural. In addition to that, benefits also include the ability to finance your closing costs into your loan, flexible credit requirements, and low interest rates. However, this loan does require an upfront mortgage insurance fee and a monthly mortgage insurance premium.

Contact the Mortgage Investors Group Today

If you are looking for a home mortgage, contact the Mortgage Investors Group today to find a home loan that is right for you!