A mortgage loan is one of the most critical investments you will ever apply for. And it is not primarily because you cannot afford to pay it, but it is more on the terms and the length of repayment. For most mortgage loans, the repayment terms are from ten to thirty years considering regular monthly payments. So, that takes a lot of commitment on your part. You will not only find your current situation, but you will also need to consider the future. If you are single at this time, then things might be easy, but it can potentially change when you start your own family since priorities will change and so as your expenses.
Therefore, it is of utmost importance that you be careful in choosing the type of loan you will get. There are many different mortgage lenders Houston with different terms. If you are not familiar with them, now is the time to learn at least the basics. It will significantly help you decide which one to consider and which ones to reject.
Conventional Mortgage Loans
Conventional mortgage loans are generally considered the most popular type of mortgage loan. It is the easiest one to get approval since their requirement is not as strict as other types. The essential requirement for this type of loan is for you to have a good credit report. You will also need to prepare for at least ten percent of the cost of the property for your down payment. One of the reasons why a lot of borrowers choose this type is because of its reasonable interest rate. And in the future, in case you have financial difficulty, you have the option to pay for interest only. However, we do not recommend this as a long-term solution since you need to bring down your principal too as much as possible.
FHA Mortgage Loans
FHA mortgage loans are the most-coveted mortgage loan for most first-time buyers. However, you need to note that far from the common misconception, this loan is not meant for first-time borrowers only. They are for everyone who is qualified. One of the reasons why a lot of people choose this type of loan is because it requires a low credit score of 580 only. It is relatively smaller than most as they need at least 640. When it comes to the down payment, it is also one of the lowest at 3.5 percent. The downside, however, is that the interest rate is relatively higher than other loans and it is not easy to get approved.
The VA loan is primarily for US veterans, military personnel, and their families. If you belong in one of those categories, then you may try to apply. But if not, find another loan type. It is perhaps one of the best since you can get a home loan without shedding any down payments.
Adjustable Rate Mortgage Loan
When it comes to interest rate, the Adjustable Rate Mortgage loan is quickly considered the best. It has the lowest starting interest rate. However, you need to note that it will eventually increase after a year or so. Therefore, the downside is, you cannot predict how much you will need to pay in the future.