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Find Your Best Type of Home Loan

February 20, 2021
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You soon find out that buying one of the homes in Columbus GA requires a lot of research. Besides researching the type of home you want and the ideal location, you also have to do research about the costs and different types of loans. There are a variety of loans available and each one could be right for you depending on your plans and situation. This will help you get started on your research. Your agent and some more internet searching might help you figure out exactly what’s right for you.

The most standard type of loan is the fixed-rate loan and is ideal for those who are planning on staying in the house for the foreseeable future. It is what it sounds like: the interest rate of the loan is fixed at the start for the length of the loan, which is typically for 15 or 30 years. Obviously, the longer the loan, the smaller the monthly payments. Still, regardless of the length of the loan, you always know exactly what the monthly payment will be. This is particularly appealing when interest rates are low as they currently are.

Adjustable-rate mortgages (ARM) are an alternative for those who don’t have higher credit scores to earn them lower fixed mortgage rates. An ARM typically offers mortgage interest rates that are lower than what you’d get with a fixed rate loan, but for a set time, such as five or 10 years. After that, for the duration of the loan, the interest rates may adjust (typically once a year) to whatever current rates are. This is where the risk comes in, as rates can fluctuate and you could find yourself paying much more. On the other hand, if rates drop, you could be paying much less. If you’re not planning on staying in the home longer than the lower introductory period, then this type of loan could be a solid choice.

If you’ve served in the military — time requirements vary — then a Veterans Affairs (VA) loan could be a strong option, particularly as there is no down payment or mortgage insurance required. However, there are some stipulations, such as it must be your primary residence and the home needs to meet basic livability requirements, which means you can’t purchase a fixer-upper with a VA loan.

With most down payments typically being 20% of the home’s value, that can make it hard for a lot of people to qualify. However, a Federal Housing Administration (FHA) loan allows you to put down as little as 3.5%, as the loans are backed by the government. Not surprisingly, there are several requirements for an FHA loan, in particular, loans are limited to $417,000 and are fixed-rate mortgages for 15 or 30 years. The buyer is also required to pay mortgage insurance, which is roughly 1% of the loan amount. This insurance can be paid up front or spread out over the life of the loan.

Finally, if you have a current home but will be purchasing another home before you’re able to sell your existing home, you can apply for a bridge loan. Also known as repeat financing, in this case, the lender will combine your current and new mortgage payments into one loan. Once the first home is sold, you then pay off the mortgage and refinance. This is particularly useful for those who have high credit scores and don’t need to finance more than 80% of the two homes’ combined value. It helps take the stress out of the process of selling and buying a home at the same time, particularly if there may be some delay between the two.

These are some of the types of loans available. There are additional ones, such as construction loans or construction to permanent loans that may be of interest if you’re purchasing one of the new-construction homes in Columbus GA. This allows you to combine the construction loan and mortgage loan into one, essentially, so you only have one set of closing costs. We have a number of preferred lenders who can help you find the right loan, whether for an existing home or if you’re building on your land, so let us help you find the perfect home and the perfect lender.

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This post was written by Grayhawk Homes