What Are The Most Popular Types Of Mortgage Loans?

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Owning a house is the dream of many American families. After all, why would you want to continue renting when you can pay and have your property? These days, it is not challenging to buy a house, especially since there are many mortgage lenders. And in addition to that, the requirements are no longer as complicated as before.

Nowadays, as long as you have a good credit history and a high credit score, you may easily get qualified for different kinds of mortgage loans. The other essential requirement necessary is your finances. It includes your source of income, which can either be a business or a company. If you are an employee, you only need to be with your employer for two years, earning a steady income.

There are also many different types of mortgages offered. Some of the most popular ones are conventional loans, VA loans, reverse mortgage Houston TX loans, FHA loans, and ARM loans. You have to be careful when choosing the loan to sign in for because the best and perfect one for one borrower may not be the best one for you too. That’s why it is good to learn as much as you can about them all first.

Conventional Loans

Conventional mortgage loans are one of the most popular investments outside the government-insured ones. Primarily, it is because they are not strict when it comes to their requirements. Their minimum acceptable credit score is only at 580. They also only require around ten percent of the cost of the house for the down payment. Which means you can even get your own home earlier than you originally planned. As compared to others, it also offers a lower interest rate, and it has better terms. When it comes to repayment, it is flexible. You can choose to pay for interest only when you experience financial hardships. However, doing so will, of course, extend the session of your loan.

FHA Loans

FHA loan is the most popular type of loan to first-time borrowers. However, they are also offered to anyone who qualifies. FHA loans offer a low down payment, mostly at 3.5 percent of the original cost of the house only. Thus, many borrowers aim to get approval. The only problem with this loan is that they are very strict and specific with their requirements that it is not easy to get support.

Also read: FHA Loans vs. Conventional

VA Loans

VA loan is offered by the Department of Veterans Affairs for veterans, military personnel as well as their families. If you fall under any of those categories then, by all means, apply, if not then better find another one. If you do qualify though, you are in for a treat because they have the lowest down payment offers at only three percent of the total cost of the house. Sometimes, they even offer no down payment at all.

USDA Rural Housing Loan

The USDA rural housing loan also does not require any down payment most of the time. However, it is only offered to certain areas. Mostly, they cater to rural parts of the country.