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Available Home Loan Options

By Gretchen Wegrich Updated on 7/26/2017

Buying a home with different loan options30-Year Fixed Rate Mortgage: A 30-year fixed rate mortgage gives you the security of always knowing what your loan payments will be. 

30-year FRM's are usually the best choice when you are planning on staying in your home for a long time and have a set income rather than a highly fluctuating income.

15-Year Fixed Rate Mortgage: A 15-year fixed rate mortgage is a popular choice for refinancing. Many people use it to shorten the length of their loans, get a lower mortgage rate, or lower mortgage payments when refinancing. 

If you chose a 15-year FRM at the point of purchase, you generally will have high payments but will own your home free and clear quickly and are usually offered a lower interest rate than a 30-year FRM.

Adjustable Rate Mortgage: An adjustable rate mortgage most often gives you the ability to start out with a very low-interest rate at the beginning of your loan, which then adjusts to the market rate after the initial period. 

The most common adjustable rate mortgage is the 5/1 ARM. Usually, an adjustable rate mortgage is a good choice for those who plan on moving in a few years or have fluctuating income.

FHA Mortgage Loan: An FHA mortgage loan is a home loan that is insured by the Federal Housing Administration. An FHA loan is often a good choice for first time home buyers and those who want to put a low down payment, as little as 3.5%. 

FHA loans also offer a streamline refinance option that allows you to refinance to a lower interest rate easily. It has less paperwork requirements as well as a home renovation program known as the FHA 203(k) loan that can be taken advantage of during a purchase or as a refinance to make repairs or upgrades to the property.

VA Mortgage Loans: A VA loan is a mortgage backed by the Department of Veterans Affairs. VA loans are available to past and active duty U.S. veterans, military reserves, National Guard and surviving spouses who meet the eligibility requirements. 

VA loans offer some of the most popular terms in the mortgage market, including no down payment or insurance requirement and limited closing costs. There are also great refinance options through VA loans, including a VA Streamline refinance option.

Reverse Mortgage Loans: A reverse mortgage is a home loan specifically for those over the age of 62, providing an opportunity to borrow against the equity in their home without having to pay the loan back. 

Reverse mortgage loans are ideal for seniors who own or are close to owning their home and are looking for a good source of financial backing. Reverse mortgages have a few different options including a lump sum payment, a line of credit or fixed monthly payments.

Commercial Loans: Commercial loans are business-related mortgage loans on real estate designed for business purposes. Commercial loans can to purchase, build or refinance commercial properties.

First Time Home Buyer Loans:  There are many programs out there meant to help a home buyer who has never done a mortgage loan finance their first home. These are called first time home buyer loans and are generally programs ran through the lending institution or offered through the state.

Jumbo Mortgage Loans:  A jumbo loan is generally a mortgage loan amount that sits in the range of $417,000 and $2,000,000 plus. Most people looking for Jumbo loans are purchasing luxury properties or properties with large land parcels attached, although it may just be the market rate in a specific area that requires this kind of loan.

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About The Author:
Gretchen Wegrich
Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.

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