1. Let's
Start with the Traditional
There are some traditional home purchase
loan choices with which most people are
familiar. There are the standard fixed rate
and adjustable rage mortgages that get the
most attention. A fixed rate home purchase
loan is when your interest rate remains the
same for the life of your home purchase
loan. On the other hand, the adjustable rate
mortgage, or ARM, allows the mortgage lender
to alter the amount you owe based on changes
in the interest rate.
2. FHA, VA...
While fixed rate and adjustable rate home
purchase loans tend to be the traditional
mortgages available, there are some
government programs you can consider if you
qualify. There is an FHA home purchase
program and a VA program along with an RHS
program. An FHA mortgage is not a loan per
se, but it is a program that will guarantee
a home purchase loan provided by a lender. A
VA loan is available to veterans or members
of the armed forces, and these home purchase
loans require very little down payment and
less stringent qualifications. The RHS
program is offered through the U.S.
Department of Agriculture, allowing rural
residents to have very low closing costs and
down payment.
3. Non-traditional
There are also non-traditional loans
available like interest-only, reverse
mortgages, and jumbo home purchase loans. A
reverse mortgage may be a good option for
older individuals, because it allows the
equity they have built in their home to
supplement their income. Interest only home
purchase loans come in both fixed rate and
adjustable rate forms, and they allow you to
only pay on the interest portion of your
loan for the first three to ten years of
your loan. The initial loan payments will be
lower, but after the initial period your
payments will be higher than they would have
been with a traditional fixed or APR home
purchase loan.
4. Jumbo...
Jumbo loans are those that are above the
loan amounts determined by Fannie Mae and
Freddie Mac. These home purchase loans have
a little higher interest rate than other
loans, because there are only small
percentage of jumbo loans bought and sold.
5. Combo Loans
When you begin to shop around for home
purchase loans, you will find loans that fit
neatly into the basic mortgages available,
and then you will find combination of home
purchase loans. For instance, you can obtain
a fixed-period ARM, where you can have three
to ten years of fixed rate payments before
your initial interest rate change. There are
a number of combinations available.
