Mortgage Options – What is the Ideal Fit?
How can buyers, realtors, and lenders, successfully navigate this arena? There are a number of different home loans available and while those of us who deal with these options everyday are familiar, home buyers only focus on these details when buying a home. As this may be infrequent, it makes sense to hit the highlights in order to guide conversation points and answer questions.
Fixed Rate Mortgage
A fixed rate mortgage provides for consistent monthly payments for years to come. Two of the most common fixed rate mortgages are the 30-year fixed and the 15-year fixed.
A loan with a fixed interest rate and a repayment plan spanning 30 years. This is a home loan structure that establishes an unchanging interest rate throughout the course of the loan, thereby providing a stable payment plan. We recommend this type of loan if you are planning to stay in your home for a minimum of 5-10 years.
A loan with a fixed interest rate and a repayment plan spanning 15 years. The interest rate remains constant throughout the life of the loan, providing secure and predictable mortgage payments and less interest on your loan. A 15-year loan will be paid twice as fast as a 30-year loan.
Adjustable Rate Mortgage
This type of loan features an interest rate that changes after a fixed amount of time. When looking for flexibility as well as a low rate you can depend on for the first few years of homeownership, an adjustable rate mortgage might be a winning option. In a sense, all ARMs are actually hybrid mortgages, combining an upfront, fixed rate period with a (longer) back-end adjustable rate period.
*After the initial time period, the rate fluctuates with the market and can go up.
Home Renovation Loan
A renovation loan is a first mortgage loan secured by a primary residence, second home, or investment property which combines standard financing plus the cost to make the improvements. It is based on the “after improved” value of the home. These improvements can be generally categorized in one of three ways:
- A renovation: which involves repairing and updating what is already existing in a home.
- A remodel: which changes the functionality and design of a home and could include adding an addition to the property.
- A repair: which involves fixing old, rundown, and broken aspects of a home to make it livable.
In a tight market, a renovation loan may provide a viable option for owning a home.
A jumbo loan or jumbo mortgage, is a financing structure that is typically used to purchase larger properties or luxury homes in high-end real estate markets. For typical home loans to be approved, the amount of financing cannot exceed the loan limits set by the Federal Housing Finance Agency (FHFA). As of 2022, the FHFA mortgage limit is $647,200. What that means for the buyer, is that once the amount of the mortgage exceeds the limit of $647,200, the loan is considered jumbo.
Three government loan types are FHA, VA, and USDA.
FHA loans provide a path to homeownership for prospective buyers who meet the criteria to qualify for this type of home loan. While an FHA loan structure trims down some conventional mortgage obstacles, this type of financing does come with added expenses that every applicant should be aware of.
VA loans provide affordable mortgage options for military veterans, active service members and their families. While a VA loan may have the benefit of a lower down payment, there are fees associated to the loan.
USDA loans are geared towards rural communities and can only be administered if the property’s location meets the USDA guidelines.
Disclaimer: Guaranteed Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.
What is the best mortgage loan option? There is no one size fits all and every situation is unique. Work with someone you can trust who listens to your scenario in order to guide and advise you in your best interest.
Why work with me at Guaranteed Rate?
Whether looking to purchase or refinance let me be your resource, who solves, helps, and guides during the home ownership process! A purchase may be for the first-time buyer, a second home, an investment property of 1-4 units, or even a turn-key financing option.
- Guaranteed Rate offers the perfect combination of technology and human touch. Using the digital mortgage application only takes 10-15 minutes to start the application process.
- We are local! Our office is located in Middleton at 1818 Parmenter Street, Ste 200.
- Call me and I will provide an estimate or calculate your rate for yourself using my web page, Calculate Your Payment
- Want to get Pre-Approved? Use the Guaranteed Rate Digital Mortgage tool, Apply Now
- Want to help your buyer’s close quicker? Try out the Guaranteed Rate Red Arrow Approval Express! This is a complete underwrite prior to submitting an offer which can help the buyer understand all the expenditures that go into purchasing a home as well as being able to offer a Loan Commitment at time of offer, subject to appraisal (if needed) and title! Ask me about the details.
Give me a call we can chat about collaborating in getting people successful home ownership.
Always here to help!
C: (608) 616-2195 O: (262) 439-2214
F: (773) 250-6593
1818 Parmenter Street Suite 200
Middleton, WI 53562
NMLS ID: 2073757