If you are in the market to buy a home, there is a good chance you may need to take out some type of mortgage loan. There are several different types of mortgage loan programs out there, and it is important to understand what type of home loan makes the most sense for you. Below, we will break down just a few types of mortgages offered at The Mortgage House so you have a better understanding of what home loan may be right for you.

A Few Types of Mortgage Loans Available:

-VA loans
-FHA loans
-Conventional loans
-Adjustable rate mortgage (ARM)
-Fixed-rate loan

VA Loan

VA home loans (also known as Veterans Affairs mortgages) are an option for anyone who is an active member of the United States military, veterans, reservists, and National Guard members. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply for a VA loan.
If you qualify, a VA loan can be an excellent alternative to a traditional mortgage.
To qualify, you must also have served 90 days of consecutive wartime, 180 days during peacetime, or six years in the reserves. The VA tends to have strict requirements for the type of home you can purchase – it must be your primary residence and must meet their minimum property requirements.

FHA Loan

FHA mortgage loans are issued by federally qualified lenders and insured by the U.S Federal Housing Authority. FHA loans are best suited for homebuyers without the means to put down a large down-payment – while most home loans require a 20% down payment to avoid private mortgage insurance (PMI), the down payment required for an FHA loan can be as little as 3.5%.
An FHA loan is an attractive option for first-time homebuyers, due to the low down payment requirements, the ease of qualifying, and ability to be approved with a lower credit score. Here’s the catch: FHA loans are typically fixed-rate loans with either 15 or 30-year terms, and most loans max out at around $270,000.

Conventional Loan

Conventional loans are mortgage loans offered by non-government sponsored lenders. These loans include fixed rate loans, ARMs, Combination (Hybrid) loans, Balloon mortgages, and jumbo loans.
Conventional loans are a good option for shoppers who can put 20% down and who have a credit score of about 640. Conventional loans do not require PMI if you put 20% down. Even if you cannot put 20% down, the PMI will be removed once your LTV reaches 78%.

Adjustable Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) are mortgage loans where the interest rate you pay adjusts at a specified time and frequency. Generally, ARMs offer a lower initial rate and adjust with market trends.
Adjustable rate mortgage loans are best for people who plan on staying in the home less than five years or plan on paying the mortgage off within 5 years.
The downside: although the initial rate of your ARM is lower than a fixed-rate mortgage, the rate could go much, much higher when the loan resets. There is a cap on the rates, but beware of landing yourself in a financial hole if you stay in the home past your initial lower-rate period.

Fixed-Rate Loan

With a fixed rate mortgage, the interest rate does not change for the term of the loan, so the monthly principal and interest payment is always the same. Typically, the shorter the loan period, the more attractive the interest rate will be. At The Mortgage House, We offer fixed-rate mortgages in 5, 7 10, 12, 15, 17, 20, 22, 25, 30-year terms.
A 30 year fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.
A fixed-rate loan is good for homeowners who like the predictability of a steady mortgage payment and who are planning to live in the house for at least a good portion of the life of their loan.

The Takeaway

Choosing the right type of home loan isn’t always easy, but it’s very important. Finding the best Missouri mortgage broker and realtor is essential to navigating through all the options for finding the best choice for you.
If you are looking to buy a home in Missouri, The Mortgage House has been proudly serving clients in cities like St. Louis, Springfield, Joplin, and Carthage for decades, and would love to help you find your forever home. Contact our office at (417) 782-7800 to get preapproved for your mortgage loan today.