Owning a house is one of the most significant investments a person can make in his or her life. And lots of people, especially the millennial generation, is aiming to purchase or build their house they can call their own using mortgage loans. However, before anyone starts the process of applying for a mortgage loan, it is essential that one should do thorough research first about the different types of mortgage loans that the Mortgage Loans San Antonio can offer and what loans should best fit their needs.
Conventional Mortgage Loan
The first and primary mortgage loan that the Mortgage Loans San Antonio will offer is the conventional mortgage loan. Also known as Fixed-rate mortgage, it the most popular and the safest mortgage loan among the rest since the interest rate is fixed throughout the loan term. It is advantageous for people who want to easily monitor their monthly dues without worrying that the interest rate might change over time. Repayment terms for this type of loan range from 10 to 40 years, depending on your preference.
Interest-only Mortgage Loan
With this type of loan, your lender will only require you to pay them the loan interest only for the next five to ten years. And then afterward, you are required to pay your lender the full loaned amount similar to a conventional loan.
Adjustable-Rate Mortgage Loan
Compared to a conventional fixed-rate mortgage, the interest rate may change over time depending on the situation of the national economy and the cost of borrowing money. Your mortgage lender will allow the interest rate to stay fixed for five years, and then it changes after that.
FHA Mortgage Loan
The first three types of mortgage loan mentioned earlier usually require strict requirements for you get approved, such as high credit score, excellent credit history, and a stable job. However, some won’t be able to comply with such kind of requirements due to various reasons such as low credit score. If you are among those who can’t qualify for any of the three mortgages above, then FHA mortgage loan is the best choice.
It offers the lowest downpayment as low as 3.5 percent, and the repayment term is up to 30 years, and it has the most straightforward lending requirements among the rest. However, you are required to pay additional charges such as private mortgage insurance (PMI) that protects the lender if you fail to pay your loan in the future.
This particular type of loan is only offered to people who are currently serving in the military or a person who had their spouse working in the military. The advantage of this loan is that it won’t require its borrowers any upfront downpayment, and the Department of Veteran Affairs guarantees the loan.
This type of loan refers to a mortgage loan that is too big for the FHA to guarantee. To apply for this loan, the borrower must have a very high credit score, and he or she needs to put a significant amount of downpayment larger than 20 percent.