A decision has been made! You are now ready to get that dream house. You are about to make one of life's most challenging choices – getting a mortgage. This is a big decision, so you have to fully understand what awaits you. There are several factors that you have to look into before signing those documents and receiving the keys to your abode. The factors include: how long do you intend to pay for it, the interest rates, and of course where to apply for one.
30 – Year Or 15 – Year Mortgage?
Most homeowners avail of the 30 – year mortgage, in fact around 90% of home loans fall under this type of loan program. This may sound too long but the upside is that the interest rate never changes during this term. So, you will not be caught surprised by any changes in your monthly amortizations later on. Yes, ficed rates starting from the first payment until the loan is paid off.
If you aim to cut down on the interest rates, then choosing a 15 – year mortgage may be the right one for you. Yes, monthly payments will be steeper, but the interest rates are noticeably lower, and overall this type of loan drastically reduces the cost of owning a home and the time you will be paying for it.
Government Loan Or Conventional Loan
Others also take into consideration between availing a government loan or a conventional housing loan. A government loan is backed by either the Federal Housing Administration (FHA), the United States Department of Agriculture (USDA), or the Veterans Administration (VA). It allows you to own that dream house even without a down payment and you can even avail of 100% financing further lowering the interest rates. Moreover, your mortgage will be insured and will be safe and protected in case a housing crisis comes up.
The downside with the government loan is that the amount granted may not be enough. If that dream house exceeds the loan limit – then the conventional loan is the way to go. Conventional loans offer loans that are above the prescribed ceiling amount thus making sure you get the home that you want.
So, to be a happy future homeowner, know exactly what type of home loan fits you. Know your capabilities and limitations. There are a variety of home loans to choose from. Be sure to educate yourself and not commit to anything you don’t fully understand. When in doubt – read and ask.
Now, go get the dream house.