There are many different types of loans available.

  • Bridge Loan. Most people need the equity in their current home to purchase a new one. But what if you sell first and don’t have anywhere to go?  A bridge loan is a temporary loan that you obtain from your lender until the permanent one can be put in place. Once the primary mortgage is in place, the bridge loan is paid off and closed out. But understand that while waiting for a closing on your home you will be making two mortgage payments. You will owe your present mortgage payment plus the payment on the bridge loan. Be certain you can afford it.
  • Conventional Mortgage. A conventional mortgage offers a fixed rate. They typically come in 10, 15 or 30-year loans. Although conventional loans used to require 20% down, most people today put 10% down. Just keep in mind, if you put less than 20% down, you’ll be asked to carry private mortgage insurance (PMI). If you’re a first-time homebuyer, there are many low down payment loans available that ask for 3%-10% down.
  • Adjustable Rate Mortgage. Adjustable rate mortgages carry an interest rate that changes to keep pace with current market rates. This is a good idea for buyers planning to stay in their home for a short time. If you plan to stay in the home for an extended period of time, you’re better off locking in a fixed rate with a conventional loan.
  • FHA Mortgage. Loans through The Federal Housing Administration (FHA) help low-to-moderate income home buyers purchase homes with low down payments (approximately 3%). You can use a gift or unsecured loan for the down payment and closing costs.
  • VA Mortgage. Veteran Affairs loans are great because they provide the opportunity to buy a home with no down payment. They are offered up to a predetermined loan amount (not more than $200,000) and are assumable by qualified buyers.  
  • Assumable Mortgage. An assumable mortgage is a loan that stays with the property. It is simply transferred to the qualified home buyer. This means considerable savings for the next buyer. It may include no points, no interest rate change and low closing costs. Assumable mortgages are often the most valuable part of a property. FHA loans given before December 1, 1986 and VA loans given before March 1,1988 are completely assumable to the qualified buyer. This means that you can take the loan along with the real estate, just as it stands.
  • Balloon Mortgage. The Balloon Mortgage has a fixed rate for a certain time frame, typically seven years, followed by a “balloon” payment requiring repayment of the entire home loan balance. Interest rates are generally lower than conventional loans. People may choose this type of loan because they plan on either selling the home, paying it off, or refinancing before the balloon payment is due.

Related posts:

  1. Non-Standard Mortgage Types
  2. The Low Down on VA Loans
  3. Good Deals in VA Loans
  4. Do You Have An Assumable Mortgage?
  5. First Time Home Buyer Loans