- Conventional Loan – conventional loans are best for Buyers with good credit scores. There are two types of conventional loans: conforming and non-conforming. Conforming loans meet (or “conform” to) Federal Housing Finance Agency (FHFA) standards. These standards include criteria such as credit, debt, and loan size. Once the lender underwrites and funds the loan, they then sell them to investors such as Fannie Mae and Freddie Mac. Non-conforming loans don’t meet FHFA standards, and therefore cannot be sold to investors like Fannie Mae or Freddie Mac. Typically they don’t meet FHFA standards because the loan is too large or the Buyer has an unusual credit profile.
- Fixed-Rate Mortgage– these loans always maintain the same interest rate throughout the life of the loan, which means your monthly payment is always the same. Typically these loans are over 15 years or 30 years.
- Adjustable Rate Mortgage – the interest on these loans fluctuates in 3, 5, or 7 years as the market changes. Occasionally the interest will be at a lower, fixed rate during the first few years, however, long term they do not provide the stability that fixed-rate mortgages do.
- FHA Loan – these loans are backed by the Federal Housing Administration, which means that FHA protects your lender against loss in the event that you default on your loan. These loans are available with low down payment options and lower minimum credit score limits, making these popular among first-time home buyers or those with past finincial issues. FHA loans can offer competitive interest rates as well, due to government backing.
- VA Loans – This is a special mention as we have many Servicemembers and Veterans in our community. VA loans are available to Servicemembers, Veterans, and eligible spouses. Typically for these loans, a downpayment is not required (depending on the lender), they have competitively low interest rates, limited closing costs, and there’s no need for Private Mortgage Insurance.
https://www.rocketmortgage.com/learn/fha-loans
Homer Real Estate 