HOME BUYER'S GUIDE

( Exploring Mortgage Options )

homebuyers guide (3)
 

Loan Type

The type of mortgage is determined by whether a government agency or private investors are engaged and the loan amount.
FHA loans are the most straightforward to obtain. They need a small down payment and a good FICO® score, but they can cost you more in the long run because you must pay mortgage insurance. An FHA loan can be obtained from any FHA-approved lender. The Federal Housing Administration (FHA) insures these loans, which implies that the FHA protects lenders from losses caused by homeowners who default on their loans.
 
Conventional loans are a little more challenging to qualify for, but they usually cost less in the long run than FHA loans. 
If you put down 20% or more on a home, you can avoid paying private mortgage insurance. 
This can save you hundreds of dollars per month on your mortgage.
Veterans, qualified surviving spouses, and active-duty service members are the only people who can get VA loans. 
 
VA loans allow you to buy a house with no money down and no private mortgage insurance.
Mortgages that surpass the usual lending limit are known as jumbo loans. 
If your loan amount is between $484,351 and $3 million, you'll require a jumbo mortgage.

Rate Type

Fixed and adjustable mortgage rates are available, and you can choose the one that best suits your needs. Our current interest rates can be seen here.
The interest rate on a fixed-rate mortgage will not change over the loan term. This choice makes your mortgage payment steady and predictable from month to month. This is an excellent option for homeowners who want to budget around a regular payment and expect to stay in their new home for a long period.
For the first 5, 7, or 10 years of an adjustable-rate mortgage, the interest rate will not change. Then, depending on market conditions, your rates will fluctuate once a year. An adjustable-rate mortgage allows you to get the best rate possible and is a fantastic option for homeowners who plan to move or refinance before the fixed-rate period expires.

Term

The word refers to how long the loan will last. Most fixed-rate mortgages have 30- or 15-year lengths, but with a Quicken Loans YOURgage, you may choose any term between 8 and 30 years. A 30-year term is standard for adjustable-rate mortgages.

BENEFITS OF A LONGER-TERM

A longer term might lower your monthly payments, allowing you to put money toward home improvements or savings.

BENEFITS OF A SHORTER TERM

A shorter term means you'll pay off your mortgage faster, pay less interest, and have more time to create equity in your property.

The Many Parts of a Monthly Mortgage Payment

  • Monthly payments are usually composed of the principal, the interest, and the taxes and insurance (typically grouped).
  • The principle is used to reduce the loan's outstanding sum. Every dollar you put toward your principal increases the amount of equity you have in your home.
  • As a cost for borrowing money, interest is paid to your lender.
  • Taxes and insurance cover your property taxes and homeowner's insurance payments. Only if you have an escrow account, which is a particular account used by your lender to retain the money used to pay your property taxes and insurance payments, is this percentage included in your payment. You never have to worry about paying your taxes or insurance fees with an escrow account because your lender does it for you.