If you’re planning to buy a home, it is an exciting thought. However, when it comes to the financing part, it can be a bit tricky and cumbersome. Yes, arranging for finance can be at times an uphill task, however, it is not something that is impossible. On the contrary, these days, you have different types of home financing options available which can help you get hold of a lump sum to buy a new home. Are you looking for the lowest home loan interest rate? In that case, these days, you will find a wide range of different types of options available. You have banks, and different other kinds of financial institutes, with that you can avail home loans, at a reasonable rate of interest.
What are the different types of home loans or mortgages available?
There are five different types of mortgage home loan options available. They are as follows
- Conventional mortgages: This is a type of home loan, which the federal government has not insured. When it comes to conventional mortgages, there are two different types of them that exist. They are
- Conforming loan: In this type of loan, the amount is available within the fixed limit which has been said by FHFA or Federal Housing finance agency.
- Nonconforming loan:Those mortgages which do not meet the guidelines said by FHFA are known as nonconforming loans.
- Jumbo mortgages: These mortgages are conventional in nature which comes with a non-conforming limit for the loan. This means that the price of the home exceeds the loan limit which has been set by the federal government.
- Fixed-rate mortgage: In these types of mortgages the rate of interest would remain uniform throughout the span of the loan. This essentially means that the amount you pay on account of the monthly mortgage would remain the same. These types of mortgages are available for a span of 15 to 30 years.
- Government-insured mortgages: These are the types of mortgages that are insured by the federal government. Three different types of government-insured mortgages are available.
If you are looking for a mortgage loan to buy a home, in that case, these are the five different options that are available to you. Planning to apply for one? Make sure that you have a good credit score and a steady and reliable source of income. These are the two key areas that are looked into by the lending agencies.