There are a number of loans available for borrowers seeking to be first-time homeowners. If you’re one of the many people who are easily confused by numbers and percentages, Provincial Bank discusses the more common types of mortgage loan.
Types of Mortgage Loans
- Conventional Loan – This is a loan which investors secure but are neither insured nor guaranteed by the Federal Housing Administration (FHA) or the Veterans Affairs (VA) department. Conventional financing features fixed and adjustable rates on loans for a primary residence, vacation, or investment properties.
- Jumbo Mortgage – This is a type of conventional mortgage loan that has high credit quality, but it also has limits higher than a conventional conforming loan.
- Government Loans – The following loans are insured by the government.
- FHA Loan – An FHA-insured loan usually offers down payments at affordable rates as low as 3.5%, while sellers can add up to 3% of the purchasing price as closing costs.
- VA Loan – The U.S. Department of Veterans Affairs guarantees VA loans. It offers long-term financing to eligible veterans or their spouses in the unfortunate event of their passing. This type of government loan offers eligible borrowers up to 100% financing while allowing sellers up to 4% contributions.
There are Home Equity, Construction, Self-Built, Bridge, Commercial, and Small Business Administration Loans as well. These types of loans offer a variety of scopes and limitations when it comes to funding, terms, and rates.
Renewable Energy and A New Mortgage Program
Aside from the common 30-year fixed-rate loan wherein homebuyers have the option to pay off their loan in 30 years at a fixed rate, there is the Home Style Energy Mortgage.
Installing solar panels on your roof offers the same interest rates as your usual mortgage loans, but it adds equity value to your home while also allowing you to save on your energy bills.
It is important for you, as a borrower and a potential homeowner, to know the different types of mortgage loans. After all, you are going to be paying for the roof over your head over several years.