Looking to take out your first mortgage? As you are probably familiar with, when you find your dream home, if you cannot pay for it upfront, then you will take out a mortgage loan for the home. What many people who are just starting out in the home-buying process may not realize, is that there are many different options for mortgages and how you want to pay for your home. If you are unfamiliar with different types of mortgages, here are a few different options that you can begin to think about:
- Fixed mortgage rate. You can opt to take out a mortgage rate that is fixed, meaning that your interest rate will stay the same the entire time. Therefore, if you choose to take out a 30-year mortgage, you can expect that your payments will stay the same.
- Adjustable mortgage rate. If you choose to take out a mortgage that has an adjustable rate, this means that your interest rate will change from time to time. About every year, your monthly payment will vary, and then stay fixed for a period. The benefit of an adjustable rate is that overall, you will be paying less interest.
- Conventional Mortgage. Taking out a conventional mortgage is one of the most common ways to finance your home. These types of mortgages have great interest rates, and, with good credit, you can finance for 15 or 30 years, or choose an option to pay interest only.
- USDA Rural Housing Loan. Although this type of loan can only be used in certain locations, it is important to know about! A USDA Rural Housing Loan requires a down payment of zero dollars. Check to see if the location in which you are looking to move offers this type of loan.
- First Time Home Buyer Loans. You can also choose to take out a first-time home-buyer mortgage loan, which has the lowest credit score requirements of all the loans. If you are just starting out, this may be a great option for you!