When looking at what type of mortgage to apply for, the number of different home loan types can be confusing. There is FHA, VA, ARM, HARP, Jumbo and conventional fixed mortgages offered at many lenders, but what is the difference between them? Here is a quick guide to easily understand what each loan does and who it is for.
Conventional fixed rate mortgages are the most common home loan type in the United States. The terms can be a variety of lengths, but are typically 15 or 30 years. Fixed rate means the interest rate will remain the same for the life of the mortgage, meaning your monthly payment will also stay the same, with the exception of taxes. ARMs, or adjustable rate mortgages, are also available for those who only plan on being in their home for a few years. ARMs have low initial rates and then vary depending on the market after 5-7 years.
FHA home loans are insured by the Federal Housing Administration, allowing borrowers to get competitive rates from lenders with lower down payments and easier credit and income standards. FHA mortgages make a great option for first time home buyers, with only a 3.5 percent down payment minimum. Best Rate USA FHA loans are also great for refinancing a conventional mortgage to get access to today’s low rates.
VA home loans are much like FHA loans, but are only for active duty military and veterans, as they are guaranteed by the U.S. Department of Veterans Affairs. To those who qualify, Best Rate USA VA mortgages offer competitive interest rates without requiring a down payment or private mortgage insurance. The available Streamline Refinance Loan allows the refinancing of an existing VA loan to obtain a lower interest rate.
Jumbo mortgages are much like conventional mortgages, except they are for loan amounts higher than $417,000. They can be used for both home purchasing and refinancing, and are available with both fixed and adjustable rates. Jumbo loans typically require lower debt-to-income ratios, higher credit scores and larger down payments. Best Rate USA Jumbo loans have competitive rates, and talking to a lender will help you decide if this type of loan is right for you.
HARP loans, which stands for the Home Affordable Refinance Program, are federally sponsored home loans designed to help responsible yet underwater and near underwater homeowners refinance their mortgages to get a lower rate. If you have a loan owned by Fannie Mae or Freddie Mac from before 5/31/09 and have been current on your mortgage payments, you may qualify for a HARP loan. Best Rate USA HARP loans have low rates, and provide help to homeowners who have little to no equity in their homes.
