Types of Home Loans

Choosing the right home loan is one of the most important steps to buying a new home. It makes a great impact on the kind of future relations you will have with your finances. Banks such as columbia bank aberdeen and majority of other banks offer 6 types of home loans which are discussed below.

Fixed-rate loan

As the most popular type of home loan it is a very convenient plan for homeowners who desire financial predictability. The tenure of these loans is typically between 15 and 30 years. For the entire tenure, the loan plan prescribes a single fixed rate and monthly payments.

Adjustable-rate mortgage

If you are a future homeowner with a low credit score, you might have found difficulty in finding a good interest rate. An adjustable-rate mortgage will allow you to make monthly payments at a lower interest rate for about 5 years. After that, the rate will adjust according to the market condition. Therefore, your credit score does not determine the amount of mortgage you pay.

FHA loan

With an FHA loan, the government backing allows you can make a down payment less than the standard 20%. If you do not have a lot of savings, this is the right loan for you since you do not have to make a huge down payment.

VA loan

If you have served in the US military for 180 days consecutively during peacetime, 90 days during wartime, or 6 years in the reserves, you qualify for VA loans. These loans allow you to procure a house without any mortgage insurance or down payments.

USDA loan

For financially struggling rural families, the US government has designed the USDA loan. This loan offers zero down payment and discounted mortgage rates to support development.

Columbia Bank
1154 NJ-34, Aberdeen Township
NJ 07747, United States
Phone: +1 732-203-9880

Bridge loan

This is a great loan for people who have a good credit score and minimum debt-to-income ratio. If you are buying a new house before selling your old one, banks will combine both the mortgages and compensate one for another.

Endnotes

Choosing the right loan plan depends on various things. Consider your financial requirements and make the right decision for future convenience.