Fixed-rate mortgages are one of the most common types of home loans. As the title of the loan suggests, the interest rate of this loan does not change throughout the entirety of the loan. The interest rate is decided when the loan is set up, and it will not differ in the loan’s lifespan.
The fixed interest rate can prove to be an advantage or a disadvantage, depending on current rates and how the market plays out. It can be beneficial to you, for example, if you have a rate of 3.8 percent and later the rates go up to 4.5 percent. You would have a substantially lower interest rate. However, it can prove to go the opposite way. You could have a fixed rate of 4.5 percent, but later on the rates go down to 3.8 percent.
FHA loans are government-backed by the Federal Housing Administration. FHA loans often have lower interest rates and down payment requirements than other loan types. However, they require a mortgage insurance premium upfront as well as a monthly insurance payment.
An FHA mortgage may be right for you if your credit does not meet the requirements for a conventional loan, or if you have limited cash for a down payment.
VA loans are provided by approved lenders and originate from the U.S. Department of Veterans Affairs. VA loans are also government-backed and they are for active military and their families as well as retired veterans.
The major benefit of VA loans is that if you qualify, you do not need to provide a down payment or an outstanding credit score.
USDA loans have a fixed rate and are based upon a 30 year amortization. The property location must fall within a designed and qualifying location. Mortgage insurance payments add additional cost to the borrower in making monthly payments but the rate is .35% and cheaper than compared to an FHA loan. This gives the RD loan a huge advantage.
There are income limitations and a family of four cannot exceed a household income of more than $82,700 annually in Arkansas. Many towns that qualify sit on the outskirts of larger cities and with less than 30,000 residents.
USDA Loan Program Features:
· 100% Financing
· Credit Scores above 660 qualify
· Household Income Max for a family of 4 $82,700 or $109,150 for 5 or more
· The property’s location must fall within a qualifying location
Jumbo mortgage loans are home loans that exceed the limits created by Fannie Mae and Freddie Mac, sibling organizations that have a significant place within the mortgage industry. Often referred to as non-conforming mortgages, jumbo loans are a bit riskier because they aren’t guaranteed by the Fannie Mae and Freddie Mac organizations, meaning the lender is the one who is responsible for any defaults that may occur. Jumbo loans can be in the form of fixed-rate or adjustable-rate mortgages. A downside to consider with Jumbo loans is they require higher down payments than those of their conforming loan counterparts.
Adjustable-rate mortgages are loans that generally have lower interest rates. However, these interest rates can change periodically, causing monthly payments to fluctuate. The loan begins with a fixed interest rate but after a set period ends, interest rates become unpredictable and may go up or down based on the market.
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