Unless you have the cash to pay for a new home, buying a home is most likely going to mean that you’ll need to secure a mortgage. The jargon and financial terms can make a potential buyer feel like they’re in over their heads. What are rates? Why are there so many types of loans? What does FHA or VA mean?
We want to demystify some of the terms you’ll hear when you start looking into a home loan. For those of us not in the world of lending, here’s a quick guide that explains the ins and outs of mortgage terminology so that you can feel empowered to know what you’re doing when you sit down to discuss with your lender.
Whether you’re purchasing for the first time or wish to find a different type of mortgage for your next home, these terms can be helpful.
- Mortgage Rate- Throughout the process of securing a home loan, you’re bound to hear talk about rates. The interest rate is a fee that a lender charges for interest on the home loan. The lender will determine the rate based on a variety of factors such as the market, your credit score, and the type of loan you choose.
- Fixed Rate- This type of loan ensures that the interest rate will remain the same throughout the life of the loan. Your monthly payment will always be the same and won’t ever increase no matter what’s happening in the market.
- Adjustable Rate- An adjustable rate mortgage is a good option for people who may not wish to stay in a home long-term. This type of mortgage’s rate will change after a set period of time to reflect the current market. If you don’t think you want to be in your home for several years, this is an option that could make sense.
- Conforming Loan- This style loan conforms to the guidelines set by Fannie Mae and Freddie Mac. The amount of the loan is restricted in this type of loan and the number of units contained in a property is also limited.
- Jumbo Loan- A jumbo loan is a loan for a higher amount of money than a conforming loan. The guidelines are more stringent to qualify for.
- VA Loan- Current or former members of the military can qualify for this government backed loan. This could make it possible for you to own your home with 0% down and qualify you for terms that can make your payments easier.
- FHA Loan- The Federal Housing Administration backs these loans. They have more flexible qualifying standards and can mean a much lower down payment depending on factors like your credit score.
The most important thing you can do when thinking of securing a home loan is to find a lender who you can trust. They’ll be able to answer questions and make the process simple. Our preferred lender Amy Meyer at Advisors Mortgage Group is always available to help answer any questions you may have, as well as to help you secure funding.
For more info on properties available near you, text “ShoreHouse” to 59559″
• Text STOP to opt-out
• Msg & data rates may apply
• Terms & Conditions URL link (http://app.kwkly.com/MobileTerms.aspx) In compliance with CTIA Rules and Regulations.
Photo by rawpixel on Pexels.com