Types of Home Loans: Which is the Right one for you?

Saving up for a homeIf you are planning to purchase a home, the chances are you are also looking for a home loan. The place you want to live in, and the period you intend to stay there, among other variables, determine which home loan best suits your circumstances. Choosing the right arrangement can save you a significant amount of money in interest, down payment, and fees. Therefore, learn your options first before choosing a housing loan in Ogden, Utah, advises Wasatch Peaks Credit Union.

Fixed rate loan

This is the most popular type of mortgage. With this loan, you have a fixed amount of monthly payments and interest rates for the entire period of the loan, which can be 15 or 30 years. This is best suited for homeowners who have no plans of moving anytime soon, and also for people who want to work with exact fixed figures.

Adjustable rate

During the first years of your loan, you will pay a relatively low amount compared to the fixed rate loan. However, after this period, your payments, as well as the interest rates, will be adjusted yearly, according to the current interest rates. That means, if the interest goes up, you pay more, and if it goes down, you pay less. This mortgage is best for people with poor credit scores, or for people who plan to sell their home before the expiry of the fixed rate period.

Federal Housing Administration loans

Normally, any housing loan requires a minimum down payment of 20% of the total purchase price of your home. However, FHA loan requires as low as 3.5% down payment. This home mortgage is best suited for people with meager amounts for the down payment.

The diversity of housing loans gives you room to adjust according to your current and future circumstances. Consult with mortgage lenders to know your options. When calculating the finances required, use an independent consultant for honest feedback.