Fixed Rate Loans
A 30, 20, 15 year fixed conventional loans are loans that have the same
mortgage payments for 360 months, or 240 months, or 180 months. Conventional loans typically are more
difficult to qualify for than FHA loans and require a slightly higher down payment.
However, in some cases rates can be lower and have lower closing costs. Also, monthly mortgage insurance is usually
less and declines with the larger down payment or equity. In fact, mortgage insurance disappears with
20% down payment or equity unlike with FHA.
This type of loan has monthly payments that are based on a 30-year repayment
schedule and the interest rate remains fixed for the first 3 or 5 years. After
that time the interest rate and thus the monthly payments may change each year.
This is called the adjustment period. The new rate is based upon changes in a
financial index and is calculated by adding a specified amount to the index to
a predetermined maximum.
A VA loan is perhaps the most powerful and flexible lending option on the
market today. Rather than issue loans, the VA instead pledges to repay about a
quarter of every loan it guarantees in the unlikely event the borrower
defaults. That guarantee gives VA-approved lenders greater protection when
lending to military borrowers and often leads to highly competitive rates and
terms for qualified veterans.
Federal Housing Administration (FHA) loan is a loan insured against default by
the FHA. In other words, the FHA
guarantees that a lender won’t have to write off a loan if the borrower
defaults since they insure the loan. Not
everyone should apply for an FHA loan. Nevertheless, they are a great help to some
borrowers that need them. FHA loans
allow people to buy a home with a down payment as small as 3.5%. Other loans might not allow such a low-down