Purchasing a home is probably the biggest investment of your life. And unless you have loads of cash sitting around in your home or in your bank account, you will need to get a home loan that you can pay over a period of time. These days there are several types of home loans or mortgages available to choose from. These include Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans, U.S. Department of Agriculture (USDA) loans, conventional loans (these include two different types: fixed-rate and variable-rate mortgages).
Needless to say, if you are new to home-buying, these choices can make things complicated for you in trying to pick the loan that is right for you. While a good mortgage lender can help you in this regard, it is best to educate yourself about the basics of the different loan options so you feel confident in your final choice. Read this article to familiarize yourself with conventional home loans.
All about Conventional Home Loans
This type of loan is suitable for those with good credit, a stable job, and a regular income. Conventional loans have flexible terms, and fewer penalties and fees compared to other loan types. They also offer good interest rates and few restrictions. About half of conventional home loans conform to the guidelines established by Fannie Mae and Freddie Mac (two government-sponsored enterprises (GSEs) who buy mortgages from lenders and sell them to investors. They make mortgages more widely available) and are called “conforming” mortgages. The rest are called “non-conforming” home loans, or jumbo mortgages. Under the umbrella of conventional loans, there are two basic types of loans:
- Fixed Rate Mortgage – This type of conventional loan is best suited for those who plan to stay long-term in their home. It offers a stable rate of interest that stays the same for the entire duration of the loan. You can pick from a 30-year, or a shorter 15 or 20-year fixed rate mortgage. You do pay more interest with the 30-year option since the interest payments are spread out over 30 years. The 15-year option comes with a lower interest rate and you can pay off your home faster, but your monthly payments will be higher. So between these two options, you can choose bigger monthly payments if they are not going to cause financial strain on you, or the smaller monthly payments that give you more time to pay off your loan.
- Adjustable Rate Mortgage – As the name suggests, this type of loan is the opposite of the fixed rate option. It has a lower interest rate, but the rate can change during the period of the loan. This is a good option for short-term homeowners who can reasonably expect to have a higher income over time. So with this loan you enjoy lower monthly payments during the first few years. This option is suitable for you if you are thinking of moving or upgrading your home in a few years. The adjustable rate option allows you to take advantage of the best interest rates available in the market. Additionally, you can refinance the adjustable rate loan with changing rates in the market, and find something you are happy with.
Let Kloze Guide you in finding the most Suitable Loan for You
As a leading mortgage lending firm in Florida, Kloze (NHL) offers the best conventional home loan rates in Fort Lauderdale. We are a residential direct lender, saving you time and money. We have successfully assisted different types of clients over the years with their unique needs. No loan is too big or too small for us- we pay the same attention to detail and provide the same outstanding service for all our clients.
As far as conventional loans, whether you have made up your mind, or are uncertain if this type of loan is right for you, our experienced staff can go over the details of your needs and financial situation and guide you step-by-step to the decision that is most beneficial for you. Just call us today at 888-995-6624 for a free no-obligation consultation. With NHL Lending by your side, you cannot go wrong about your home loan decision.