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Understanding the Seven Major Types of Home Loans


Owing to extremely high prices of real-estate properties, many quite unfortunately fail to purchase their dream house. Well, rather than giving up on your endeavor and getting all disappointed, I would personally recommend you to opt for a loan, through which payments could be made easily in the form of monthly installments. A few popular home loans available currently are mentioned below in details.

  • Bridge Loan, also known as repeat financing or gap loan, is an excellent choice for people buying a residence without selling the existing one. It makes the entire transition seamless, keeping financial or emotional meltdowns at bay. Good credit and negligible debt-to-income ratio is a requisite. Lenders would generally wrap the new and old mortgages together.
  • Fixed rate loans have managed to acquire the most popularity probably because they prescribe a definite amount as interest and allow people to pay off for fifteen or thirty years. According to research, homeowners who like predictability and are going to stay in the said property for a major portion of their life must consider purchasing a fixed rate loan.
  • Individuals who have worked in the military department of United States, 90 days during war, 180 days during peace, and at least six years in reserves, can choose Veteran Affairs (VA) loan because it is much more beneficial than the traditional ones. On qualifying, they would be able to occupy their desirable house without any mortgage insurance or down payment.
  • Adjustable rate mortgage or ARM provides low rates of interest and a person needs to pay off for about ten years. But after the stipulated period, the interest amount along with monthly installments would adjust in accordance with the prevalent charges. ARM is ideal for homeowners with very poor credit scores.
  • USDA home loans are especially designed for people living in rural areas. Discounted interest is provided and as the government takes complete care of a house’s cost price, there is no need to worry about the down payment. However, it is necessary to be aware of the catch. The debt load can never go beyond by 41% of the income.
  • FHA or Federal Housing Administration loans have managed to acquire much recognition. Here people can set their down payment as low as 3.5%. Other loans ask almost 20%. Now isn’t that simply amazing? Even though not quite flexible, FHA is perfect for homeowners with inadequate savings.
  • Balance transfer loan is generally availed when a person wishes to shift his or her home loan amount from one banking institution to another. This is usually done for making imbursements at a much lower rate or if the current lender is not capable of fulfilling the needs of the customer in concern.

If you have already decided which home loan to choose from among the options specified above, try paying attention to other essential aspects. For instance, where exactly are you planning to keep your precious possessions during relocation? The spacious self-storage facilities equipped with hi-tech security systems and climate-controlled feature could be highly beneficial in such a case. Simply type storage units near me online and you would be provided with a host of addresses.

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