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Types of Home Loans

It can be hard to determine what kind of loan works best for you when it comes to choosing a mortgage. It’s hard to break down the benefits and cons of each, so we’re here to break down what each loan is, and how it could possibly affect you. If you’re interested in applying for a home loan, talk to your Bend Realtors and see which lenders they recommend.

Fixed and Adjustable

There are two types of mortgages that you can come by, a fixed rate or adjustable rate. When you have a fixed rate mortgage, your loans have a fixed rate of interest, meaning they have the same rate of interest from the time you get them until when you pay them off. An adjustable mortgage has a rate that adjusts with the market, it might go up or go down as the market changes.

Each kind of loan has benefits and problems, but it’s up to you to decide what you’re willing to commit to. With a fixed rate you know your rate won’t change, even if the market changes. This means that if the rates drop lower than yours, you’re still stuck paying the rate you locked into. The flip side to this is that if you have an adjustable rate and the market rates soar, you’re stuck paying higher prices. Talk to a local lender and discuss which would work best for you.

Government and Conventional Loans

A conventional home loan is one that isn’t issued by the government in any way. Most consider conventional home loans to be regular home loans. A government issued home loan is one that is guaranteed through the government. Here are the different types:

FHA

An FHA Loan is part of a mortgage insurance program. These types of loans are available to first time homebuyers and other home buyers. With this loan the government is insuring the lender against any losses they might have from borrowing money. FHA loans are managed by the Department of Housing and Urban Development. With this loan you can put a lower payment down, as low as 3.5%. With this also comes mortgage insurance, that might make your monthly mortgage payment higher.

VA

If you’ve ever been a military service member or are a family member of one, you qualify for a VA loan program.  This mortgage is guaranteed by the VA. The benefit of this kind of loan is that veterans and their families can get 100% financing when they buy their home which means they have no down payment at all.

USDA or RHS Loans

Managed through the Rural Housing Service, part of the Department of Agriculture, this is for more rural residents. If you have a steady, but low or modest income, and other financing isn’t available to you, a USDA loan might be a good option. It takes into consideration the adjusted median income of the rural area, and bases the loan off of that.

Buying a Home

There are a lot of different steps to take when it comes to buying a home, and picking the right kind of loan is one of them. This can be the biggest part of purchasing a house, other than finding a property that is perfect for you. Talk to your Bend Oregon Realtors today, and see which lenders they recommend. Meet with a lender and find out which mortgage or home loan is right for you.