On The Money

A Loan For You: The Different Types of Loan Options

Home MortgageApplying for a mortgage loan is nothing to be ashamed of, as it is quite a normal thing to consider. Every American need and deserves a roof over their heads. In taking out a loan and buying a home, there is a variety of loan options available for each and every person.

Primary Residential Mortgage, Inc., a large mortgage firm based in Salt Lake City, Utah, lists down ten loan options. It is important for a potential homebuyer to scrutinize the mortgages available because it is crucial that you can pay your monthly dues to avoid any troubles.

The Different Types of Loan Options

  1. Fixed Rate Mortgage – The fixed rate mortgage requires a down payment of 5%, with fixed terms of 15 to 30 years, and a minimum credit score of 620.
  2. FHA LoanThe Federal Housing Authority loan, insured by the federal government, has a down payment of 3.5%. Its terms can either be fixed or adjustable, ranging from 10, 15, 20, 25, or 30 years. Your credit score must be a minimum of 640 unless approved by FHA Choice.
  3. VA LoanThe Veterans Affairs mortgage loan has no down payment and has the same terms of payment and credit score as the FHA loan.
  4. Jumbo Loans – The Jumbo loan requires a down payment of 20% with 15 to 40 years of fixed and adjustable payment terms. The minimum credit score is 700 and the maximum loan amounts to $2.5 million.
  5. Rural Housing (USDA) Loan – This mortgage loan has fixed terms of 30 years with a minimum credit score of 640.
  6. FHA Choice Loan – Similar to the FHA loan, the differences are in the terms and credit score; 30 years, fixed and a minimum of 500.
  7. FHA 203(k) Loan – This FHA loan’s only difference from the FHA loan is the terms of payment — 30 years, fixed.
  8. Adjustable Rate Mortgage (ARM) – The down payment for this type of mortgage varies and its terms range from 3/1, 5/1, 7/1, or 10/1.
  9. HARP Loan – The Home Affordable Refinance Program loan has no down payment. Its terms of payment involve fixed and adjustable, multiple years, while its minimum credit score is 620. It also has mortgage insurance and a loan cap of $417,000.
  10. Reverse Mortgage – Lastly, reverse mortgages serve to provide seniors a home with no monthly mortgage payments. This works by converting their home’s equity into cash.

Do your research and find which loan best suits your financial situation, so you know what direction to take in searching for the home of your dreams.