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A home is the largest purchase that most of us will make during the course of our lives, and often, it is one of the most important. This makes choosing the mortgage loan that covers the cost of this house one of your most important decisions as well. Since there are many types of mortgage loans, you should be able to find one that suits you.
The two major types of loans are fixed rate and adjustable rate. After settling the amount of your loan, finding out whether you qualify for a fixed rate loan or and adjustable rate loan will most likely be your next step.
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The types of loans available under these two categories are numerous:
- Construction loans give you the opportunity to build your dream home by
financing the cost of materials, labor and land.
- FHA loans are insured by the Federal Government through the Federal Housing
Administration and ask for low down payments while providing low interest
rates. The FHA has special home loan programs for teachers, police officers
and low income families.
- VA loans are insured by the Veterans Administration and provide qualified
veterans with low interest loans, usually with no down payment
A fixed rate loan is generally given to borrowers that have not encountered major credit complications and seen as superior by many borrowers as such a rate is more stable than an adjustable rate. Fixed rates do not change over the life of the loan, ensuring that the monthly payment will remain the same throughout the repayment term. This allows more confidence in financial planning and a sense of security. However, if interest rates drop, some borrowers may feel unsatisfied with their loans. In such a situation, fixed rate loans would not allow borrowers to benefit from low interest rates without refinancing.
Buying a home is one of the largest purchases you will ever make. Since a home is such an important step, you will want to make sure that you fully understand the loans that are offered to you. Understanding your loan will make the repayment process less problematic, and allow you to make educated decisions about your loan. There is a large amount of information about home loans to be found online. Learning more can only help you finance the purchase of your new home with confidence. To contact four lenders about your home loans options, fill out our free short form.
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