When it comes to buying a home, there are many types of loans. Let’s take a quick look at a few of the choices you have when it comes to a home loan when starting your first-time home buying process. Figuring out which loan is best for you may seem difficult but your mortgage professional at First Ohio Home Finance will help you choose the right option.
A conventional loan is the most common loan type. A conventional loan often has lower interest rates for those with good credit. This loan adheres to guidelines set by Fannie Mae and Freddie Mac, two agencies responsible for regulating the mortgage industry. The main difference between this loan and others is that a conventional loan is backed by a private lender instead of a government agency. With a conventional loan, there may be additional costs such as private mortgage insurance to back the lender if you were to miss any payments on your loan.
Federal Housing Administration, or FHA loans, are issued by an approved lender but insured by the government. FHA loans allow lower down payments and lower credit scores to qualify. FHA loans are often popular with first time home buyers due to their flexible down payment options. The FHA loans often come with two types of insurance premiums, an Upfront Mortgage Insurance Premium (UFMIP) and an Annual MIP (paid monthly). Aside from the traditional first-time buyer loans, there are other types of FHA loans as well.
A Veterans Affairs loan, or VA loan, is available to past or present members of the military and select military spouses. Similar to the FHA loans, a VA loan is issued by an approved lender and backed by the Department of Veterans Affairs. This type of loan may require no down payment. VA loans are meant to help military members become homeowners without great credit or large down payments.
Other Types of Loans
Other types of loans include USDA loans for buying/refinancing in less populated areas, adjustable rate mortgages and many more. Depending on your financial situation, whether you are buying for the first time or refinancing, looking into your options is the best place to start.
There are multiple other types of loans for all types of borrowers and their specific situations. Let a professional at First Ohio Home Finance walk you through your options and set you up with the best type of loan for your needs.