Mortgage Options: Which One is Right for You?

by Lili Patch 09/18/2019

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

Lili Patch

Radio Personality turned Realtor; I welcome the opportunity to turn house selling and house hunting into a fun and educated experience. House buying should feel like you're shopping with a friend, and I will keep you in the loop the entire time so you will not be wondering what you just signed or what happens next. It's that seamless, and we may even have lunch or dinner. I do this because when I started my real estate journey on the east coast, buying my first condo at the age of 18, I was clueless. I wished I had someone who had made that a stress free transaction- but it wasn't, and thats how I got the Real Estate bug. Let's take a step back first though to my first "job", I studied communications and entered the broadcasting industry. Through the years I purchased some more properties, and felt there was a gap that needed to be filled in the Real Estate profession. I set the bar very high on skill set & customer service. I have Real Estate Licenses in 4 states, which means I have more education, and training than most agents. My level of knowledge, strategy and experience is what sets me apart. I know how important being an astute negotiator is, being relentless, and answering the phone when it rings. I have earned certifications as a Seller Representative Specialist (SRS), a Certified Home Marketing specialist (CHMS), and a Pricing Strategy Advisor (PSA).

Meeting with people and traveling both east coast and west coast has given me a broad appreciation of the different laws, protections, and scenario's you encounter in real estate. Having the benefit of my communication background coupled with the vast knowledge of multi-state experience has been the backbone of my success.