Loan Types

Real estate buyers have numerous financing choices, with loans suitable for just about any situation. The five primary financing options are fixed-rate, FHA, VA, 203(k) and Interest-only mortgage loans.

Fixed-rate mortgage loans lock buyers into a fixed interest rate for a set time span. These loans often accompany 15 or 30-year terms, with customized loan periods available based on several factors including the lenders ability, the buyer’s needs and unique credit qualifications. These loans are extremely attractive during low prime rate periods, often allowing for refinancing or principal prepayment at any time.

FHA loans are another popular financing option, providing government insurance protection to help reduce the risk when lending money to home buyers who cannot invest at least 20 percent as a down payment. Most borrowers can obtain an FHA loan for up to 97 percent of the purchase price assuming acceptable credit and debt ratios.

Honorably discharged veterans of the U.S. Armed Services may also qualify for a VA loan with little to no money down. While FHA loans are insured by the federal government, VA loans take one additional step, in that the Veterans Administration guarantees repayment. This eliminates the lender’s risk altogether.

The FHA 203(k) loan program provides the funds needed to finance property repairs and improvements prior to move-in. Designed to expand homeownership opportunities and revitalize neighborhoods, this program covers owner-occupied residences with one to four units, single family homes, condominiums, planned unit developments (PUDs) and manufactured homes that fall within HUD guidelines.

Finally, interest-only mortgages can provide the means for home buyers to obtain property more easily, quickly and cost-efficiently. Borrowers choosing interest-only terms typically pay no principal for a set duration, but might still be responsible for a sizable balloon payment at the loan’s maturity. Always use caution, read terms carefully and understand your responsibilities as a borrower.

These and countless other personalized financing options can help consumers realize their home ownership dreams.