Housing loans are some of the most common loans worldwide. And if you’re reading this, you probably have a mortgage loan of your own or planning to get one.
Whether you already have a home of your own or just eyeing one, it’s essential to know the different types of housing loans. This knowledge can make or break your entire life–either give you the house of your dreams for an incredible price or lead you to bankruptcy even with a small property!
From the name itself, conventional loans are typical mortgages. They lend you money to buy a house according to your credit score. If you have an ideal credit score (preferably 620 or higher), it’s best to go with conventional loans.
Jumbo loans mostly go beyond the parameters of the Federal Housing Finance Agency. This is why it’s the best option if you’re eyeing a big property.
Government loans are specifically designed for people who don’t have enough income to pay monthly mortgages or can’t make a large downpayment. The only downside of these kinds of loans is that you have to live on the property. In short, it’s not an option if you’re just investing in real estate.
Fixed-rate mortgages are not affected by the market value of the property. Whether its value increases or fluctuates, you’re still going to pay the same monthly premium. This is especially favorable if you’re thinking of spending a lot of time in your home.
With an adjustable-rate mortgage, your monthly payment will depend on the market value of your house. It will increase if the value of your home rises and will decrease if the value diminishes. Other people find this more preferable since getting a lower monthly rate is possible.