From understanding the types of mortgage loans available, to the prospect of finding that perfect abode, purchasing a home can feel overwhelming. Having a general understanding of key elements of the process (not to mention support from your community bank) can make a world of difference. Central Bank has pulled together a high-level overview of the types of mortgage loans most commonly available to today’s homebuyers. Read on to become familiar with your options!

  • Conventional Loans: Home loans offered through a private lender such as a community bank, or through Freddie Mac and Fannie Mae. Traditional pre-qualifications, such as credit score limits and past payment history, come into play to determine eligibility.
     
  • Jumbo Loans: Conventional home loans for properties with purchase prices that exceed the federal mortgage limit. Jumbo loans typically require a high credit score and quality debt-to-income ratio, as well as more extensive documentation throughout the approval process.
     
  • Federal Housing Administration (FHA) Loans: Home loans insured by the federal government and geared toward buyers with low- to medium-level incomes. Credit score requirements and down payment amounts are traditionally lower than with conventional loans.
     
  • Veteran Administration (VA) Loans: Home loans insured by the federal government and offered through a private lender such as your community bank. VA loans are available to those who have served in the U.S. military and, in certain instances, their spouses. Such loans traditionally do not require a down payment.
     
  • Fixed-Rate Mortgages: Home loans with predictable, locked-in interest rates. Payments remain consistent from one month to the next, unaffected by market changes. Such loans are typically available in 15- and 30-year terms, and offer peace of mind due to their steady nature.
     
  • Adjustable-Rate Mortgages: Home loans with interest rates that rise and fall with market conditions. Such loans traditionally feature a fixed rate through the first several years before moving to adjustable status. Such loans’ fluid nature opens the borrower up to some level of risk.
     
  • Balloon Mortgages: Home loans with rates similar to those of traditional 30-year terms, but paid over a shorter period of time. Traditional balloon mortgages require a large lump-sum payment at the end of the loan’s term.

Of course, there are pros and cons associated with all types of mortgage loans. A qualified mortgage professional can help you evaluate your available options and determine the path that makes the most sense, based on your existing circumstances and future goals. Central Bank would be glad to help. Feel free to reach out to our mortgage experts at any time for insight centered around you.