What Mortgage Is Right For Me?


One of the biggest financial transactions most people perform is purchasing a home. And since housing is so expensive most people need to obtain a mortgage which is a loan that is used to purchase a home. Sometimes people borrow nearly 100% of the purchase price and sometimes people put a down payment so that they borrower less money.

Choosing the right mortgage is very important. Finding the balance between a payment that is too high and a payment that is too low is an essential part of making the right decision on which mortgage loan program is right for you.

Types of Mortgages:

There are many types of mortgages for consumers to consider. Each mortgage program has its own benefits. It’s common for homebuyers to think about which loan program is right for them but some struggle to figure out the differences. These are the four main loan programs:

  • Conventional
  • FHA
  • VA
  • Jumbo

Are there others; sure but more than 95% of all 1st mortgages fall into these four categories. Conventional loans are also referred to as “conforming loans” and are based on the underwriting guidelines of Fannie Mae and Freddie Mac.

FHA (Federal Housing Administration) mortgage loans are government-backed loans and are ideal for those with less than perfect credit and small down payments. FHA mortgage loans come with an upfront Mortgage Insurance Premium along with a month Mortgage Insurance amount that is attached to your monthly mortgage payment.

VA (Veterans Administration) are loans designed to help those who were in the military and Jumbo loans are for those with big loan amounts. For those that have served in the military the VA, the mortgage is a great loan program to consider. It offers various options and it does a great job helping former military purchase that primary home for their family.

Obtaining A Low Rate:

It doesn’t matter if this is your first mortgage or your 5th mortgage; everyone wants to know: How do you get a low mortgage rate? Being prepared and being realistic is really important. If your credit is not so great don’t think you’re going to get better or the best mortgage rate terms. Gather your income documentation and then find three or four highly rated mortgage companies to get quotes from. And if you don’t know the basic mortgage terminology than take an afternoon to do some research and get a better understanding of the various terms a Loan Officer may use.

Mortgage Term Lengths:

When you obtain a mortgage you have to determine how long (number of years or number of months) you want to have the mortgage. The fewer the number of months the higher the payment; the greater the number of months the lower payment since the payments are spread out over a longer time frame. Here are the typical time frames for mortgage loans:

  • 30 years (360 months)
  • 20 years (240 months)
  • 15 years (180 months)
  • 10 years (120 months)

Most people chose the 30-year time frame so that their monthly mortgage payment is low. The 15-year time frame seems to be the second most popular time frame and after that, it’s the 20 years than the 10-year time frame.

When choosing a time frame, it’s important to make sure the monthly payment is something you can afford. The worst thing would be for you to have a payment that is too high which might cause you to miss payments and then possibly lose the home to foreclosure.

Find The Right Company:

Hiring the right company and working with the right Loan Officer will really help achieve your goals. A good company will offer you creative solutions like family mortgages and so on. So, before you do anything do some research to find a top-rated company, and when you talk with the Loan Officer make sure you ask good questions. The right Loan Officer will take the time to discuss the various options and answer any questions you may have.

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