Trying to find the right mortgage can be an overwhelming process with the countless options available today. As your Atlanta mortgage broker, I have explained below the three main categories of mortgages.
Fixed Rate Mortgage vs. Adjustable Rate Mortgage
A fixed rate mortgage is a traditional mortgage that offers a set monthly rate that will never change. This is a good option for you if you are a planner. It allows you to budget appropriately so you will know exactly how much you owe on your mortgage and how long it will take you to pay it off. A fixed rate mortgage is the safer option, but the interest rates are typically higher.
An adjustable rate mortgage is a choice for the risky at heart. The interest rates are lower but can change overnight with no warning. This is a good option for you if you are not planning on staying in your home for a long time, or if you are wanting to refinance in the near future. Having an adjustable rate mortgage gives you better rates and can help you qualify for a larger loan.
Conventional Loans vs. Government Issued Loans
A conventional loan is not issued by the government. There are more stricter requirements for a conventional loan because if the borrow defaults on their payments, the lender has to pay. Requirements for a conventional loan include good credit standing, working at least 2 years with your current employer, and paying as little as 3% of your home’s down payment.
A government issued loan includes FHA, VA, and USDA loans. An FHA loan is administered by the federal housing administration, and is a good option if you have a low income and cannot afford high monthly payments. A down payment of only 3.5% is required but you will need to get mortgage insurance.
A VA loan is administered to military veterans, and a USDA loan is supplied by the United States Department of Agriculture, for those living in rural areas. For more information on VA and USDA loans, contact your Newnan mortgage lender at 404-597-5662.
Conforming Loan vs. Jumbo Loan
A conforming loan is one that follows the general Fannie Mae and Freddie Mac guidelines. This typically deals with the size of the loan. Conforming loans do not exceed $453,100 for detached, family homes. Loans that are greater than $453,100 are considered jumbo loans.
An Atlanta mortgage can be expensive due to the competitive housing market. This means that a jumbo loan may be the best option for you. Benefits are that it allows you to borrow more money for an expensive home, but you have to have excellent credit to be considered. The downside is that these loans have higher interest rates and expensive monthly payments.
Contact your local Atlanta mortgage broker at 404-597-5662 for more information on the three different categories of mortgages, or to get started today!