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Hey there! Are you looking to buy a home but don’t know which type of mortgage loan is right for you? Well, you’ve come to the right place! There are several main types of mortgage loans available, and each one has its own unique benefits. From fixed-rate mortgages to adjustable-rate mortgages, let’s take a look at the different options so you can make an informed decision. So buckle up and let’s get started!
What Are The 2 Main Types Of Mortgage Loans? [Solved]
Well, it’s pretty simple: conforming loans meet the guidelines set by Fannie Mae and Freddie Mac, while non-conforming loans don’t. So if your lender sells your loan to one of these two companies, it’s a conforming loan; if not, it’s non-conforming. Got it?
Fixed-Rate Mortgage: A fixed-rate mortgage is a loan with an interest rate that remains the same for the entire term of the loan. This type of loan offers borrowers stability and predictability, as their monthly payments will remain consistent over time.
Adjustable-Rate Mortgage (ARM): An adjustable-rate mortgage is a loan with an interest rate that can change periodically, usually in response to changes in the market or economic conditions. ARMs typically start off with lower initial rates than fixed-rate mortgages, but they can increase over time if market conditions warrant it.
FHA Loan: An FHA loan is a government-backed mortgage insured by the Federal Housing Administration (FHA). These loans are designed to help low and moderate income borrowers purchase homes by providing them with more lenient credit requirements and lower down payment options than traditional mortgages.
VA Loan: A VA loan is a government-backed mortgage guaranteed by the U.S Department of Veterans Affairs (VA). These loans are designed to help veterans and active duty military personnel purchase homes by providing them with more lenient credit requirements and lower down payment options than traditional mortgages.
Jumbo Loan: A jumbo loan is any mortgage that exceeds conforming loan limits set by Fannie Mae or Freddie Mac, which are currently $510,400 for most areas of the country and up to $765,600 in certain high cost areas such as
Mortgage loans come in all shapes and sizes. There are two main types: fixed-rate and adjustable-rate. Fixed-rate mortgages have an interest rate that stays the same throughout the life of the loan, so your monthly payments stay consistent. Adjustable-rate mortgages, on the other hand, have an interest rate that can change over time, so your payments could go up or down depending on market conditions. Whichever type you choose, make sure you understand all the details before signing on the dotted line!
