What Type of Loan Is Best for Buying a Home?
Posted By: Kara Masterson on January 17, 2022 |
Buying a home is one of the most important investments you'll ever make. You could be making this investment for years, so getting the best deal possible is important. The type of loan you take out will have a big impact on how much money you pay in interest and down payment at closing and what your monthly payments are. Here are some of the best loans for buying a home.
Conventional loans are the most common type of loan for buying a house. Conventional loans can be used to buy one or more homes, depending on your lender. Both banks and mortgage companies give them out. These types of loans are best for those with good credit scores, but it's possible to qualify if you don't have great credit.
Federal Housing Administration Loans
If you're a first-time home buyer, the Federal Housing Administration might be able to help. These loans are insured by the federal government and can be used for one home. You'll make a down payment of less than 20% with these types of loans, which makes them great for those who don't have a lot of cash to put down. The downside is that you'll pay a slightly higher interest rate and fees than you would with a conventional loan.
You can also contact a refinancing specialist, one like American Financing, if you have any queries regarding this loan.
Veterans Affairs Loans
These loans are given out on behalf of the Department of Veterans Affairs, which offers them either no money down or up to $6,000. You can use these types of loans for one or more homes, and there are no pre-payment penalties on the principal loan amount. Like FHA loans, you'll pay a slightly higher interest rate than what you'd get with a conventional loan.
USDA loans are guaranteed by the Department of Agriculture and can be used for one home in certain rural areas. The USDA offers 97% financing on these types of loans, which means that you only need to make a 3% down payment. You'll pay slightly higher interest rates than what you'd get with conventional or FHA loans, but it's a good option if you're looking to buy in an area where those loans aren't available.
Getting a loan for buying a home is an important part of the process, but it can be unclear. Make sure that you check with several lenders and compare rates and terms before deciding. Additionally, talk to a real estate agent or lawyer who can explain all of the fees and financing options available so that you understand what's going on. If you do your research and get a solid loan, you'll be able to buy the home of your dreams without breaking the bank.
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