Types of Mortgages

When it comes to obtaining a mortgage, everyone has different needs. Watch and learn about the various mortgage products available so you can make an informed decision.

As a homebuyer, you have a choice of different mortgage products to finance your purchase:

Fixed-rate loan: Provides a constant interest rate and monthly principal and interest payment for the life of the loan. Some advantages of fixed-rate loans:
• Easier to budget.
• Offers protection against rising rates.

Adjustable rate loan: The interest rate and monthly payment can fluctuate. Some advantages of adjustable rate loans:
• Typically, interest rates are initially offered at a discount rate.
• In a low-rate environment, an ARM can save significant money over a fixed-rate mortgage.

FHA loan: Mortgage loan that is insured by the Federal Housing Administration (FHA). Some advantages of the FHA loan:
• Lower down payment, typically 3.5%.
• Lower closing costs.
• Easier credit qualifying.

VA loan: Mortgage loan guaranteed by the US Department of Veterans Affairs (VA), and is intended for veterans or active military members. An advantage of a VA loan:
• Typically no down payment.

Jumbo loan: A mortgage with a loan amount that is above the limits set by the government, also referred to as a non-conforming loan. This type of mortgage allows you to make a purchase on a home that exceeds the amount of money you would be able to acquire with a conforming fixed or adjustable rate loan. An advantage of a jumbo loan:
• If you are able to afford monthly payments, you can finance a larger loan without making a large down payment.

There is a range of mortgage products, so it is important to research what is best for your needs. Be prepared with a lot of different terms and acronyms when dealing with a mortgage banker and if there's ever any time that you don't understand, just ask.