Loans are confusing! Thankfully, we make it simple. Here’s a breakdown of each type of loan for you to compare.
Buy a Home or Refinance
A purchase loan is used for the purpose of buying your home. A refinance loan is a new loan that is replacing your existing mortgage loan. You can refinance your mortgage to receive a better rate, a lower monthly payment, cash out for home improvements, or consolidation of other loans. A “rate-term” refinance simply describes refinancing your existing mortgage in order to improve either the interest rate, the term, or both.
15-Year Fixed Mortgages
Fifteen-year fixed rate loans are mortgages that have equal payments each month and pay off over fifteen years. Usually, a fifteen-year loan will have a lower rate than the thirty-year fixed loan program. This means significantly less interest is paid over the life of your loan, and you build up equity much faster.
30-Year Fixed Mortgages
Thirty-year fixed loans are mortgages that have equal payments each month and pay off over thirty years. This is the most common and popular mortgage loan.
Jumbo loans are non-conforming, meaning they do not fall within the maximum loan thresholds that you find with a conventional loan. Because these loans are larger, they have stricter eligibility requirements and slightly higher rates than a conventional loan. Jumbo loans vary in both length and rate structure.
FHA loans are insured by the Federal Housing Administration. These loans are backed by the government and may be your only option if you have a low credit score or a limited down payment. A mortgage insurance premium (MIP) is required in order to acquire this loan, so be sure to add that amount into your projected costs. The length of these loans are thirty-years and they have a fixed rate structure.
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