When applying for a Fairfax mortgage it is important to know what options are available to you. You will have many different choices to make including fixed or adjustable rate mortgages and government ensured or conventional loans. Each of these choices has different benefits and drawbacks and should be heavily weighed in regards to how long you plan to own your home.
You should also make sure your credit score and credit report are as strong as possible so that you can get the best rates.
1. FHA Loan
The FHA program is designed specifically to help more people to become homeowners. FHA loans are insured by the Federal Housing Administration, which typically makes them easier to qualify for than a conventional loan. However, you will have to pay for mortgage insurance which will increase your monthly payments. If you trying to have a low down payment or have bad credit this may be a great loan option for you.
2. VA Loan
VA loans are insured by the Veterans Administration. These loans are designed for active military, veterans and eligible spouses. This loan offers a low down payment as well as other special benefits. However, you have to find a lender that is VA-approved.
3. Conventional Loan
It is harder to qualify for a conventional loan, but they offer more benefits than FHA or VA loans. If your down payment is 20% or more you can avoid purchasing mortgage insurance. These loans are also not subjugated to as many limits and can be used for second homes or investment properties. These loans are not insured by the government in any way.
4. Fixed Rate Mortgages
If you are concerned about your base monthly mortgage rate changing, you may want to consider getting a fixed rate loan. This can be a great loan if you are planning to stay in your home for a long time. While your base monthly payment will never change, it is important to remember that your property taxes and homeowners insurance can increase. It’s popular to get a 15-year or a 30-year fixed rate, so strongly consider your future and if you see yourself in that home for that long.
5. Adjustable Rate Mortgages
If you are not planning on staying in your home for a long time, an adjustable rate mortgage may be what’s right for you. You will get a lower interest rate for a set amount of time, usually 1,3,5, or 7 years. However, if you do not resell your home during the time frame, then your interest rate will be reset to market rate. This can be a risk because your interest rate is then based on market rate rather than your financial situation. This means you can actually wind up paying more than if you have a fixed rate mortgage.
6. Bridge Loans
Bridge loans are specifically designed those you are purchasing a new home without having already sold their current one. This can be a financially draining time if you are having to cover the costs of two houses, so bridge loans step in to help hold you over until your house is sold.
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