Whether you are hoping to purchase your first home or expand into investment opportunities, understanding mortgage loan terminology is key to determining what loan will best suit your needs. While there are many facets to the loan process, there are specific critical terms used in mortgage lending that you should be familiar with to make well-informed decisions.
Also referred to as an ‘ARM,’ an Adjustable-Rate Mortage offers an initial low-interest-rate period. During this initial period, interest rates are typically lower than those of a fixed mortgage term, which means lower monthly payments in this period. Once this period has concluded, the adjustable-rate follows until the full amount of the loan is met. In this period, interest rates are subject to fluctuate up and down depending on its specific financial index.
Just as its name suggests, a Fixed-Rate Mortage or Loan keeps the same rate that it began with, regardless of market fluctuations. This is a popular loan program for home buyers as it provides stability and predictability that many homeowners depend upon when budgeting long-term. While Fixed-Rate Mortgages may carry a slightly higher interest rate than an ARM, it tends to be competitive in that the interest rate will not rise down the road.
Federal Housing Administration
Federal Housing Administration loans, FHA loans are insured with a government guarantee. Lenders of FHA loans tend to be more willing to lend funds due to the FHA’s more lenient guidelines for qualifying. FHA loans are intended to make homeownership more accessible to people across the board, giving lenders incentives to lower down payments and interest rates.
USDA Loans are government-insured loans for the purchase of rural property outside of metropolitan areas. These loans are serviced by lenders who meet federal guidelines set by the USDA and offer some unique benefits for people living in rural areas outside major metropolitan centers. Some of these benefits include no down payments required, which can make a huge difference when deciding what property to purchase.
As with the USDA loan, the VA loan is also government-insured. The U.S. Department of Veterans Affairs insures VA loans that are issued by approved VA lenders. These loans were created to encourage lenders to be more flexible and lenient with their qualifying guidelines for veterans. VA loans offer unmatched benefits to military servicemen and women and surviving spouses, including no mortgage insurance requirement and 100% financing available.
Securing Your Best Loan
Loan shopping for your next property purchase can be a full-time job in and of itself. At LoanBiz.com, we have created a one-stop-shop for your loan needs. Visit us online to find lenders ready to bid on your loan today and receive precisely what you need on the terms you deserve.