Types of Home Loans: Which One Is Right for You?
Fixed-rate loans are one of the most common. A fixed-rate loan has an interest rate which does not change along with a monthly payment which is made for the life of the loan which typically runs 15 or 30 years.
Adjustable-rate mortgage is one which can have a fluctuating interest rate.
- FHA loan
- VA loan
- USDA loan
- Conventional
- Bridge loan
- Seller Financing
Many homes are financed FHA, VA or Rural Development. VA and Rural Development are often no money down type of loans. FHA is one of the most common loan types with a down payment of 3 to 5 percent. Mortgage Insurance is another cost of financing and you will want to check on the amount when figuring what the loan will end up costing you.
Most second homes, vacation properties, rentals and commercial property will need to be financed using a conventional loan which most often requires a larger down. Your lender can help determine which is the best loan type for you based upon the type of property you are purchasing. FHA, VA and USDA loans are for owner occupied properties and are not mean for rental or investment properties.
Depending upon your loan type, there are certain requirements that not only a buyer might need to meet and qualify for but a home must also meet the required guidelines and also qualify for the loan. There are things you will want to look over and be prepared to fix in order to get financing. Chipped and peeling paint, roof condition, safety hazards, broken or damaged windows, unfinished projects in the home, sufficient heat source and good foundation. These are things that can hold up financing but they are also items that depending upon the situation, ,might be able to be resolved. This is where an experienced agent can come in handy. There are ways to cross some of these bridges depending upon the buyer, seller, loan type and what the repair and cost might be. If the home is right for you, then sometimes we put our heads together to figure out how we can make it work and be a win win situation.
Once in a while a property may be available which offers seller financing. Keep in mind that the seller is usually looking for a down payment which is similar to a conventional loan or more. They need to get enough to cover their closing costs and prepare a contract for deed or trust indenture and to have an escrow account set up to make your payments to.
