Mortgage Options: Which One is Right for You?

by Bill Conda 07/19/2020

Photo by Mastersenaiper via Pixabay

When it comes to financing your home, you have a several mortgage options available. Each type of mortgage offers different advantages, so be sure to do research before applying. Below are some of the most popular types of mortgages borrowers may consider. 

Conventional Loans

A conventional loan is a mortgage not insured by the federal government. In most cases, conventional loans will conform to the standards established by Fannie Mae and Freddie Mac. However, some lenders may offer loans that do not adhere to these standards, which are known as non-conforming loans. In most cases, conventional loans will require a down payment of 20 percent. Otherwise, you will have to pay mortgage insurance. 

FHA Mortgages

FHA mortgages are a popular type of government-backed loan that is designed to give people with lower credit scores and/or lower buying power the ability to purchase a home. If you opt for an FHA mortgage, you may not need to make as large of a down payment, but you will need to pay mortgage insurance. Backed by the Federal Housing Administration, these loans are popular among first-time homebuyers. 

VA Mortgages

VA mortgages are home loans backed by the U.S. Department of Veterans Affairs. These loans are available to current members of the military as well as veterans. If you qualify, VA mortgages are very beneficial, as they offer a lower interest rate and may not require a down payment. VA mortgages don’t require you to pay any mortgage insurance, either. 

Jumbo Mortgages

A jumbo mortgage is a loan that has limits higher than most other mortgages, which allows you to buy a more expensive property. These loans are most popular in areas where home prices are higher. Interest rates on jumbo mortgages are usually comparable to the rates paid on a conventional loan. However, the qualification requirements are much more strict. In most cases, you will need to show proof of significant assets, as well as a high credit score. Some lenders may offer other options, but the mortgages above are the most common. 

Keep in mind that even after you have chosen the type of mortgage you want, you will still have other decisions to make with regard to the type of rate and the length of the term. To make the best decision for your needs, consider working one-on-one with an experienced mortgage agent who can review your situation and help you choose the loan that makes the most sense.

About the Author
Author

Bill Conda

 With over 35 years of expertise, Bill is a highly awarded Realtor® and recognized Top 5% of all Brokers countrywide. Early in Bills career, while running his Family’s New Car Dealership, his commitment to his clients and employees earned him the "Masters Sales Managers' Award" from General Motors. In 1984 this ethic helped propel Bill to the top of the industry within 2 years of moving to beautiful York Beach, Maine. Where Bill earned his place in the Top 5% of all Brokers in the country, Including the Covenant Centurion Award 15 times! Having vacationed and engaged with the community right here on Singer Island for the past 27 years, He made the decision of moving here full time to better assist others on what he considers ‘his best life choice to date’! “The area is truly a hidden-gem…” has been spoken uncountable times. His experience and knowledge of the local Industry enable him to offer you outstanding results, making your buying or selling journey, seamless and enjoyable!