Loan Basics: What Type of Home Loan Should You Apply For?

Purchasing a home is a major investment for most people. Getting the right mortgage loan is an important part of home ownership that should not be rushed or hurried. Homebuyers have a number of options when considering loans for their new property. Choosing the right type for you depends on a number of factors:

Conventional Fixed Rate Mortgages

Many people find that a conventional fixed rate mortgage serves their financial needs well. Conventional mortgages offer terms over 10, 20 or 30 years at affordable interest rates that are fixed for the term of the loan. The interest rate remains the same throughout the term of the loan. This stability allows many people to organize their monthly expenses more easily around the loan amount.

Adjustable Rate Mortgages

An adjustable rate mortgage is another option for home buyers.  These loans may have a very low interest rate in the first few years, generally three to five years, which then increases significantly after the initial period. These loans can be a good idea for people who only intend to stay in the home for a few years, taking advantage of the low interest rate and low monthly payments and selling the home before the interest rate rises. However, you should be certain of your future plans before acquiring this type of loan.

VA Loans

If you are a military veteran or active duty service member, you can take advantage of guaranteed home loan program offered by the Veteran’s Administration. These loans offer affordable rates and may not require a down payment in some cases. However, additional documentation of military service is required. Many lenders offer these loans and can help applicants with the necessary paperwork.

Cash Sales

Cash sales are becoming an increasingly popular way to find a home for use as a residence or rental property. Buyers often locate distressed properties that are on the market at lower prices and purchase them with cash, creating instant equity. Of course, this requires that you have a considerable amount of cash on hand for the purchase.

However, you can apply for a home mortgage in Fort Collins, CO through a number of lenders, such as Home State bank to supplement your cash purchase or to have money on hand for any repairs or remodeling the home might need.

Whatever type of loan you choose, real estate experts recommend dealing with a reputable lending institution that can help you navigate the process quickly and professionally.