Your financial history and housing plans can determine your ideal mortgage type.
Your life and finances are different from every other home buyer, and your mortgage should be tailored to fit. There are several different types of mortgage loans. Finding the type of mortgage that meets your unique needs can save you money and help make you a homeowner sooner.
These types of mortgage loans may fit you, if……Your credit is great, and you have good savings
Conventional mortgage: This is a traditional type of mortgage loan. The mortgage lender assumes more risk than they do with a government-backed loan. Conventional loans can be fixed-rate or adjustable-rate. (See below to know which one is right for you.)
Why could it be right for me?
A conventional loan can be more economical if you have the right financial history. First, you need to have a FICO credit score of at least 620 (and the higher the score, the lower your interest rate).
You don’t need a 20 percent down payment to qualify—it can be as low as 3 percent (though, that’s pretty rare)—but just like with your credit, your loan will end up costing more with a lower down payment. And if you pay less than 20 percent up front, you’ll also pay private mortgage insurance (PMI). (If your down payment is less than 20 percent, you can cancel the PMI when the mortgage balance is paid down to 80 percent.) Use Trulia’s affordability calculator to see how much home you could afford.
For more information on types of mortgage loans visit the Scoop Blog
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