Many homebuyers believe that there are only a few types of mortgages out there—but there are actually hundreds of different options to choose from! If you're feeling a little overwhelmed by the process, we're here to guide you in the right direction.
We've compiled all the basic information you need to know for the perfect mortgage. And if you have any questions, we'd be happy to help you!
Determine How You'll Pay Interest
Before you start exploring the different types of mortgages, be sure to check out interest rate options, too. Here are some of the most common:
Fixed-Rate Mortgage
- Your interest rate will always remain the same
- You'll pay the same amount every month
- Very predictable
Adjustable-Rate Mortgage
- Your interest rate will start low and fluctuate to match current rates
- Expect potential interest rate increases or decreases
- Your monthly payments could also increase or decrease
Two-Step Mortgage
- Also called 5/25s or 7/23s
- Has an initial fixed interest rate, then changes to an adjustable rate after 5 or 7 years
- Can be converted to a fixed-rate loan or automatically become adjustable
Choose Your Loan Type
Now that you've learned a little more about your interest rate options, it's time to take a closer look at the types of mortgages available to buyers in the Plymouth area. Here are a few loan options you should consider:
Conventional Loan
- Lasts for 15 or 30 years
- Can be fixed-rate or adjustable
- Often requires great credit, stable financial history, and a 20% down payment
USDA Rural Loan
- Only available in more rural areas
- Lower down payment requirements
- Helpful for buyers with steady, low, or modest income
FHA Loan
- Does not require a high credit score
- 3.5 – 10% down payment options
- Comes with mortgage insurance and higher interest rates
VA Loan
- Only for active duty military and veterans
- No mortgage insurance required
- Can have a 0% down payment
- Typically requires a one-time funding fee
Balloon Mortgage
- Has low initial payments, but the remaining balance must be paid off in a lump sum
- The borrower must pay off the balance, refinance, or convert the loan after the term
- Can have lower interest rates and credit requirements
MI Home Loan Program
- State-funded program that helps first-time buyers
- Offers up to $7,500 in down payment assistance
- Requires a homebuyer education course
Lender-Specialty Loans
- Mortgage brokers or banks may offer their own programs
- Can have lower down payment or credit requirements
- May help first-time buyers or low to moderate income buyers
Calculate Your Mortgage
Now that you've learned all about home loans and interest rates, it's time to crunch some numbers! Feel free to play around with our mortgage calculator to get an idea of what your monthly payments might look like.
Mortgage CalculatorLooking for More Mortgage Advice?
If you still have a few questions about mortgages, Mike Gladchun would love to help. Mike is a licensed mortgage loan originator (NMLS 1183514) with Somerset Lending Corp, so just reach out to him for all of your purchase and refinance mortgage needs. He can even give you updates on current interest rates and trends!