Welcome to the topic “TYPES OF MORTGAGES.”
When it is about buying yourself a home, there are plenty of options in Colorado investment properties available for you, but when you figure out the financing side of the things, it can be overwhelming. Choosing among the various types of mortgage loans is not that difficult if you know the lingo. After doing your homework, consulting the best realtor team, nailing down your budget and down payment, you will have a good idea of which loan works the best for your needs.
Choosing a mortgage is not as simple as it looks, and the reason is that the Colorado Licensed Realtors suggest various types of mortgages available. These loans are made up of different components, i.e. interest rate and length of the loan to the lender and much more. The following are the common types of mortgages.
A conventional loan is a type of home buyer loan that is not secured or offered by any government entity. Instead, a traditional mortgage is available through banks, private lenders, credit unions and different mortgage companies. Two government-sponsored enterprises can guarantee some conventional mortgages; one is the Federal National Mortgage Association (Fannie Mae), and the other is Federal Home Loan Mortgage Corporation (Freddie Mac).
Usually, conventional mortgages have a fixed rate of interest, so the interest rate does not change throughout the life of the loan. As the federal government does not guarantee conventional mortgages or loans; therefore, their lending requirements usually are stricter by banks and creditors.
FHA loan is a Federal Housing Administration insured mortgage. The FHA insurance protects the mortgage lenders, thus allowing them to offer loans with interest rates that are below average, easy credit requirements and relatively low down payments that start from 3.5%.
FHA loans are prevalent among the first-timers, who have lower income and have low credit, thanks to the flexibility and low rates of FHA loans. Unlike several other mortgage lenders, the FHA is quite flexible on property types that are eligible for financing. The borrowers can easily purchase a home in any neighbourhood in the United States, including the State of Colorado. With the FHA loans, you can buy a single-family home, two units, three or four-unit dwellings with the help of Colorado real estate.
This is a $0 down mortgage option that is available mainly to Veterans, Service Members and the select military spouses. The VA loans are issued by the private lenders that can be a bank or a mortgage company and is guaranteed by the U.S Department of Veterans Affairs (VA).
The United States Government created the home loan in 1944 to help the returning service members buy homes without going for the down payment or excellent credit. In recent years, we have seen that most of the lenders have tightened their lending requirements; therefore, the Veterans and active Military homebuyers find it difficult when facing a little strict credit standard or down payment requirement.
A physician home loan or a doctor loan is a mortgage that makes it relatively easy and fast for the residents, attending physicians and other medical professionals who like to buy a home with low down payment and also avoiding mortgage insurance.
The doctor loan has been around for decades and was initially designed to lure the medical professional to the banks who were soon-to-be affluent. The physician community represents a profitable niche and is not that risky for the banks as the doctor’s default on their loans at the lowest rate as compared to other professions.
Physician mortgage loans are a tool that could make things better, but it depends on how they use it. As a doctor, you should take some time to consider not only the advantages and disadvantages of the doctor loan but also the impact that it can have on your life.
Choosing the type of mortgage is an important consideration. The good news is that you have so many options than many realize. When comparing the rates, you have to focus on the interest rate and fees. You should carefully consider your financial situation, review your needs and circumstances and do your research regarding real estate so you can know what type of mortgage loan will help you to achieve your goals.
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