When you’re ready to purchase a new home, it’s important to find the right financing. There are many types of mortgages available, and finding the one that best meets your needs could be one of the most important financial decisions you make.
A government insured loan is one that is backed by the U.S. government. This could be an FHA, VA or a USDA/RHS loan. Each of these loans will have their own eligibility requirements, such as military service or the buyer residing in a rural location. One of the advantages of these government-backed loans is you’ll typically be able to purchase your new home with less money down. When trying to find the best mortgage for your new home, keep in mind that these mortgages can often be combined.
Another common type of mortgage is the conventional mortgage. This type of financing is not backed by the government, so it tends to be a little harder to secure. A big benefit with this type of mortgage is that you can often avoid having to purchase mortgage insurance.
When shopping for a mortgage, you’ll also find both fixed rate and adjustable rate mortgages. There are pros and cons to each. A fixed rate loan will have the same interest rate over the entire term of the mortgage. With a fixed rate mortgage you’ll make the same payment each month, this can definitely be convenient. On the other hand, an adjustable rate mortgage can change over time. Typically, the adjustable rate mortgage will start off with a lower interest rate than the fixed rate mortgage, but there’s no guarantee that it will stay lower over the course of the loan.
When you learn how to manage your mortgage, you’ll usually be able to save a significant amount of money. It’s important to know what type of mortgage best meets your needs.