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Mortgage Home Loans – Which One Is Right for Me?

Mortgage Home Loans

When it comes to buying a home, you are shopping for more than just the zip code and a pool in the backyard.

You also need to shop for a mortgage home loan that will work best with your current budget and financial future. Before going on a hunt with your realtor, take a little time to learn about the different types of mortgage home loans, to see which mortgage home loan might work best for you.

What is a Mortgage Home Loan?

A mortgage home loan is money you borrow with interest to purchase your home. Simple concept really. Or is it? Since there are many types of mortgage home loans, with varying terms and interest rates, you will want to do some investigating to figure out which home loan will get you the best rate so that you can pay more toward your home and less interest in the long run – more home for your money.

Learn More About Mortgage Home Loans the Easy Way

Being prepared to buy a home ahead of time can save you a lot of money in the long run. By assessing which mortgage home loan might be best for you, you may be able to ask better questions of your lender. What if choosing the right mortgage home loan means the difference between paying for a house that only meets your needs and buying your dream house?

Curious what a realistic mortgage would look like for you? Test numbers in our Mortgage Calculator.

Your Home. Your Financing.

How do you know which mortgage home loan is best for you? Take a look at this overview:

Fixed-Rate Mortgage

While the interest rate on a fixed-rate mortgage might be higher than other options, this loan is popular for homebuyers because the interest rate does not change through the life of the loan (15 and 30 years). With a fixed-rate mortgage home loan, you will know each month how much your mortgage payment is (principal and interest).

Key Benefits

  1. Provides the lowest fixed rates for eligible buyers
  2. Because it's fixed, there are No Interest-Rate Surprises

Consider If You

  1. Plan to stay in your home for a long time
  2. Have an established credit history
  3. Can put at least 5% down for the home

Adjustable-Rate Mortgage

Some homebuyers like the initial low interest rate that the adjustable-rate mortgage (ARMs) home loan offers. For varying reasons, you may want to purchase a home with a lower interest rate for the first year of the loan. Perhaps you are moving jobs or cities, and having lower mortgage payments for the first year of purchase makes more financial sense. It is important to understand the terms of this loan. After the initial period of low interest has ended on the loan (for example, the first 13 months of your home purchase), the interest rate could rise or fall (float). If the interest rate rises, your monthly mortgage payment will also be larger. As long as you are prepared financially, then an increased monthly mortgage home loan payment is a surprise you’ll be able to afford.

Key Benefits

  1. Provides the lowest short-term rates
  2. Initial lower monthly payments
  3. Initial fixed rate periods of 3-10 years, then rate can adjust or down thereafter

Consider If You

  1. Plan to move before the end of the initial fixed-rate period
  2. Want an initial monthly payment lower than usually offered by fixed-rate mortgage
  3. Have established credit history
  4. Can put at least 5% down for the home
Mortgage Home Loans – Which One Is Right for Me?

Before going on a hunt with your realtor, take a little time to learn about the different types of mortgage home loans, to see which mortgage home loan might work best for you.

Homebuyers who may not have a sizeable income may qualify for one of two types of mortgage home loans: the FHA loan (Federal Housing Administration loan, based on financial need) and VA loans (provided by the U.S. Department of Veterans Affairs for US veterans). Both loans have low down payment options with flexible credit standards and income guidelines.

FHA Loans

Key Benefits

  1. Low down payments
  2. Fixed-rate loans available
  3. Flexible qualification guidelines

Consider If You

  1. Have limited funds for a down payment
  2. Don't have an established credit history or have experienced credit challenges in the past

VA Loans

Key Benefits

  1. Low or no down payments
  2. No mortgage insurance requirement
  3. Flexible qualification guidelines
  4. Fixed-rate and ARM options

Consider If You

  1. Are an active military member or veteran
  2. Are the surviving spouse of a service member who died as a result of military service

Jumbo Mortgages

A jumbo mortgage home loan is a home loan in an amount for a property that exceeds a conventional loan limit $484,350* in most of the U.S. for a residential home purchase). Due to it’s size, this loan is referred to as “jumbo.” Jumbo mortgages are considered a higher risk for repayment to lenders because larger properties tend to take longer to sell at full price as the value depreciates. These mortgage home loans tend to have a higher interest rate than other mortgage loan options, and a larger down payment might be required.

*The threshold is set by Fannie Mae and Freddie Mac, two government agencies that purchase the bulk of U.S. residential mortgages from lenders so that money is freed up to offer more mortgages to the public.

Key Benefits

  1. Increased purchase limits for higher-priced properties
  2. Competitive rates
  3. Fixed-rate and ARM options

Consider If You

  1. Are buying a home that exceeds conforming loan limits ($484,350 in most areas)
  2. Have an established credit history
  3. Seek low down payment options

When you buy a house, you are not just paying for the cost of the house – you need to factor in how your interest rate will impact your monthly mortgage payment. Choosing the right home loan could save you money or free up additional money that you can pay toward the principal amount of the home loan – paying off the home faster.

Still have questions? A representative from PrimeWay Federal Credit Union is a phone call away and happy to assist.

Author Bio

Laurie Masera Garza

Laurie is a digital marketing and social media maven who has more than 15 years of interactive multi-media experience under her belt. When she is not rocking the social media atmosphere, Laurie loves to find Houston’s hidden dining gems, but ask her about tacos. She loves tacos. In her spare time, Laurie loves creating, whether its art or memories.

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